Highlights of RBI’s 3rd Bi-monthly Monetary Policy FY2025-26

The Reserve Bank of India (RBI) conducted the 56th and 3rd Bi-monthly Monetary Policy Committee (MPC) meeting of Financial Year (FY) 2025-26 from August 4 to 6, 2025 under the chairmanship of Shri Sanjay Malhotra, Governor, RBI.

• The meeting was attended by the MPC members Dr. Nagesh Kumar, Shri Saugata Bhattacharya, Prof. Ram Singh, Dr. Poonam Gupta and Dr. Rajiv Ranjan.

Exam Hints:

• What? RBI 3rd Bi-monthly MPC
• Policy Rates: Repo – 5.5%, Reverse repo – 3.35%, SDF – 5.25%, MSF – 5.75%
• GDP: 6.5% for FY26
• Inflation: 3.1% for FY26
• 3 Consumer centric schemes: Doorstep re-KYC, Simplified deceased settlement, Retail direct upgrade
• T-Bills: SIP in Retail Direct platform
• RBI team: 30 members to remove obsolete regulations

RBI MPC Keeps Repo Rates Unchanged at 5.5%, Maintains ‘Neutral’ Stance

Rate unchanged: All the MPC members voted unanimously to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 5.50%.

• Consequently, the standing deposit facility (SDF) rate shall remain unchanged at 5.25% and the marginal standing facility (MSF) rate and the Bank Rate at 5.75%
• The MPC also decided to continue with the neutral stance.

Reason: The move aims to give more time for the earlier rate cuts, i.e. 100 basis points (bps) rate cut since February 2025, to pass through to lending rates and stimulate broader economic activity.

RBI Policy Rates:

RBI Projects GDP Growth at 6.5% For FY26

GDP Forecast: The committee has retained the real GDP growth for FY 2025-26 at 6.5%.

• The projection for FY26 for Quarter 1(Q1: April – June 2025) at 6.5%; Q2 (July – September 2025) at 6.7%; Q3 (October – December 2025) at 6.6%; Q4 (January – March 2026) at 6.3%.
• The real GDP growth for Q1:2026-27 (April-June 2026) is projected at 6.6%.

CPI Inflation for FY26 revised to 3.1% versus 3.7% earlier

Inflation Projection: The medium-term target for Consumer Price Index (CPI) inflation is 4% within a band of +/- 2%.

• The CPI inflation for FY 2025-26 is now projected at 3.1%, a significant reduction from the 3.7% forecast made in June.
• The CPI quarterly estimates are: Q2 at 2.1%, Q3 at 3.1% and Q4 at 4.4% and projection for Q1:2026-27 is 4.9%.
• The CPI headline inflation declined for the 8th consecutive month to a 77-month low of 2.1% in June 2025, driven by a sharp decline in food inflation.

India’s Current Account Deficit (CAD)

CAD: India’s CAD moderated to 0.6% of GDP in 2024-25 from 0.7% of GDP in 2023-24 due to robust services exports and strong remittances receipts.

• Merchandise trade deficit further widened in Q1 of 2025-26.

RBI announces 3 consumer-centric schemes to drive financial inclusion

Schemes: The RBI announced the following three key measures for individual customers, ranging from simplifying procedures for families of deceased bank account holders to improving access to government bond markets:

• Doorstep re-KYC (Know Your Customer) and financial services: Banks will hold camps to assist customers with re-KYC process to a large number of accounts.
• Simplified claims for deceased customers’ account: The RBI announced the streamlining procedures for accessing funds in accounts and recovering contents from deceased bank customers deposit lockers and other custodial arrangements. 
• Retail Direct gets an upgrade: The upgrade aims to enhance the user experience, making it more accessible for retail investors across the country.

Click here to read about the Schemes

RBI launches SIP, auto-bidding feature in Retail Direct Platform for T-Bills

SIP for T-Bills: The RBI announced the launch of Systematic Investment Plans (SIPs) for Treasury Bills (T-Bills) via its Retail Direct Platform.

• This facility will help in the automatic placement of bids in the primary auctions of T-bills by using the NACH (National Automated Clearing House) mode of payment.

RBI’s campaign for financial inclusion saturation plan, re-KYC covers a third of total gram panchayats

Campaign: The Gram Panchayat (GP) level campaign launched on July 1st and running until September 30, aims to promote financial inclusion schemes and re-verify KYC information for bank accounts to further strengthen financial inclusion.

• Apart from the above, the campaign also initiated opening of PMJDY (Pradhan Mantri Jhan Dan Accounts) for unbanked adults and enrolment under various social security schemes.
• The banks are utilizing Business Correspondents (BCs) to assist in the campaign’s execution.

30-member RBI team to steer removal of obsolete regulations

30-member team: The RBI has set up a 30-member Regulatory Review Cell (RRC), a dedicated internal mechanism, to streamline financial regulations and reinforce systemic resilience.

• Currently, the RBI has approximately 8,000 active regulations, circulars, master directions and notification. The RRC aims to streamline this framework down to roughly 3000 relevant regulations.
• In the 1st phase, the cell has selected 33 core subjects for consolidation.

India’s foreign exchange reserves

Forex: As on August 01, 2025 India’s foreign exchange reserves stood at USD 688.9 billion (bn), sufficient to cover more than 11 months of merchandise imports.

Important Definitions:

Repo Rate: It is the interest rate at which the RBI lends money to commercial banks for short-term needs, against government securities.

Reverse Repo rate: It is the interest rate at which the RBI borrows money from commercial banks, usually for short durations.

Retail Direct Platform: This platform allows retail investors to buy Government securities (G-Secs) in primary auctions as well as buy and sell G-secs in the secondary market.

• The portal was launched in November 2021 to facilitate retail investors to open their Gilt accounts with the RBI.

Treasury Bills, are short-term loans that you give to the government. In return, the government promises to pay you back after a few weeks or months — with a little extra money as a reward.