RBI Annual Report 2024–25

The Reserve Bank of India (RBI) released its annual report for the financial year 2024–25 on May 29, 2025. The report was formally submitted to the central government by Governor Sanjay Malhotra, as required under Section 53(2) of the RBI Act, 1934. It is an annual official document released by the RBI. It is a statutory report prepared by the Central Board of Directors of the RBI. Among others, the report includes RBI’s key banking trends, digital payment trends, challenges, and broader goals for the next year. It includes several important developments in various sectors, such as financial, economic, and digital during a particular financial year. Additionally, it includes the functioning and role of the RBI, policy developments, reforms, fiscal, and monetary updates, etc.

Economic Growth Outlook

• GDP Growth: In FY 2024–25, India’s GDP grew by 6.5 per cent, confirming the country’s position as the fastest-growing major economy which shows resilience of Indian economy, owing to proactive policy measures and strong macroeconomic fundamentals.
• Driven by higher local consumption and more capital expenditure, this growth can be attributed to corporate and banking sectors that are in a decent state at present. Looking forward, the RBI projects GDP growth at the same pace of 6.5 per cent in FY 2025–26.
• Global Economic Growth: In FY 2024–25, the global economic growth was reduced to 3.3 per cent, while in FY 2023–24, it was 3.5 per cent. This growth rate is even less than the historical average (2000 –19), i.e., 3.7 per cent. The RBI projects that the global economic growth would be even less in the next year, i.e., around 2.8 per cent.
• Global Merchandise Trade: Global merchandise trade (all imports and exports of tangible products, except services, non-monetary gold, etc.) rose to 2.9 per cent in FY 2024–25 from 1.0 per cent in FY 2023–24.
• Net exports contributed positively, with exports rising by 7.1 per cent and imports declining by 1.1 per cent, contrasting with a 10.5 per cent growth in imports during 2023–24.

Aggregate Demand and Consumption Trends

• In 2024–25, private final consumption expenditure (PFCE) rose by 7.6 per cent, driven by robust rural demand and a revival in urban discretionary spending, surpassing the 6.1 per cent growth in 2023–24.
• Government final consumption expenditure (GFCE) grew by 3.8 per cent, lower than 8.1 per cent in the previous year, reflecting fiscal consolidation efforts.
• Growth in gross fixed capital formation (GFCF) moderated to 6.1 per cent, down from 8.8 per cent in 2023–24 and 13.5 per cent in 2022–23, indicating a slowdown in private sector investments.

Aggregate Supply and Sectoral Performance

• Real gross value added (GVA) grew by 6.4 per cent in 2024–25, marginally lower than 7 per cent in 2023–24.
• Agricultural and Allied Activities: Agricultural GVA rose to 4.6 per cent in 2024–25, while it was 2.7 per cent last year. That is, it has almost doubled its contribution to India’s GDP, aided by favourable monsoon rainfall and strong kharif production.
• Industrial Sector: The GVA growth slowed sharply to 4.3 per cent in 2024–25 from 11 per cent in 2023–24, reflecting softer manufacturing momentum and moderation in mining and quarrying.
• Services Sector: The GVA of the services sector also declined to 7.5 per cent in 2024–25 from 9.2 per cent in 2023–24. Construction activity remained strong, while the trade, hotels, transport, and communication sectors experienced consistent growth. 

Household Savings

In FY 2024–25, there was an increment of 5.1 per cent in net household savings of gross national disposable income (GNDI) improving from 4.9 per cent in the previous year. This implies well-management of personal finances amid economic uncertainties.

Employment and Labour Market Developments

• The labour force participation rate reached its highest level on record. Average monthly net additions to the Employees’ Provident Fund Organisation (EPFO) increased to 10.8 lakh in 2024–25, up from around 10 lakh in 2023–24.
• The share of regular wage and salaried employees rose to 21.7 per cent in 2023–24 from 21.5 per cent a year earlier, indicating steady formalisation of the labour market.

Inflation and Monetary Policy

• Inflation:  Headline Consumer Price Index (CPI) inflation was reduced to 4.6 per cent in 2024–25 from 5.4 per cent in 2023–24 and 6.7 per cent in 2022–23.
• Core inflation was moderated to 3.5 per cent, down from 4.3 per cent in 2023–24, with reduced pressure in housing and clothing segments. Fuel inflation was deflated at -2.5 per cent significantly lower than 1.2 per cent a year ago due to lower global prices and domestic price adjustments. Further, food inflation averaged 6.7 per cent down from 7 per cent in 2023–24 but still contributed approximately 68 per cent to overall inflation pressures.
• Inflation displayed vitality throughout the year: easing to 3.6 per cent by July 2024, peaking at 6.2 per cent in October and declining to 4.9 per cent by March 2025. As average inflation was brought down under 4 per cent target in February–March 2025, RBI can easily maintain economic growth in the following year. However, inflation can be affected by geopolitical tensions, climate change, and global trade obstacles.
• Global Inflation: The inflation across the globe was curbed to 5.7 per cent in FY2024–25, while it was 6.6 per cent in FY2023–24. This was because of the reduced commodity prices and ease of supply. However, services inflation continued to be high in advanced economies.
• Monetary Policy and Liquidity Management: In October 2024, the Monetary Policy Committee (MPC) stance was changed to ‘neutral’ from ‘withdrawal of accommodation’. In February 2025, the repo rate was reduced to 6.25 per cent, cutting down by 25 basis points for the first time since February 2023.
• Liquidity Trends: There was overall surplus in liquidity. However, it shifted to deficit from December 2024 to March 2025. This was because of cash and forex operations. The cash reserve ratio (CRR) was reduced to 4.0 per cent in December 2024, releasing Rs 1.16 lakh crore of primary liquidity into the system.
• System liquidity moved from surplus to deficit and back to surplus by year-end, reflecting tax outflows, forex market operations, and seasonal cash demand.
• The average daily net liquidity injection under the liquidity adjustment facility (LAF) was Rs 0.5 lakh crore during QI: 2024–25, highlighting RBI’s active management to maintain stability.
• Inflation, as defined by the International Monetary Fund, refers to the rate at which the general price level of goods and services rises over a given period, reflecting an increase in the overall cost of living, usually measured annually.
• Core inflation measures changes in the price of goods and services excluding volatile categories such as food and energy items.
• Headline inflation reflects the overall change in the price level of all items in the consumer basket, including food and energy.

      Core inflation = Headline inflation – volatile components (food and fuel, etc.).

Financial Markets and Currency Movement

• In the financial markets, the volume of certificates of deposit (CD) issuances increased to Rs 11.9 lakh crore. The 10-year G-Sec yield declined to 6.58 per cent by March 2025, down 40 basepoints from the previous year, aided by fiscal consolidation and inclusion expectation in global bond indices.
• Corporate bond issuances rose to Rs 8.6 lakh crore, up 16.1 per cent from Rs 7.4 lakh crore in 2023–24.
  Equity market saw significant volatility. The BSE sensex peaked at 85,836 in September 2024 but corrected later, closing the fiscal year at 77,415, marking an annual gain of 5.1 per cent.
• There was a considerable depreciation in the Indian rupee (INR). However, when compared to other emerging market economies, it can be considered stable. According to RBI, cross-border trade settlements must be done in INR.

Financial Performance

• Balance Sheet Growth: RBI’s Balance sheet grew by 8.2 per cent, reaching Rs 76,25,421.93 crore as on March 31, 2025, while it was Rs 70,47,703.21 crore by the end of the previous financial year.
• Growth in Assets: The asset growth was driven by a 52.01 per cent increase in gold holdings and a 14.3 per cent increase in domestic investments, owing to solid policy support. As far as foreign investments are concerned, there was modest growth by 1.7 per cent. Various global uncertainties impacted these investments.  
• Liabilities: The liabilities of the RBI increased due to various reasons, including greater balances in revaluation accounts, high currency issuance, market operations, etc.
• Income Growth: Compared to the last year, there was an increase in the net income for FY 2024–25 by 22.77 per cent, reaching up to Rs 3.38 lakh crore. Similarly, expenditure also increased by 7.76 per cent, reaching up to Rs 69,714 crore.
• Surplus Transfer: The net surplus transferred was Rs 2.68 lakh crore, while that of FY 2023–24 was Rs 2.10 lakh crore. Thus, the net surplus was increased by 27.37 per cent supporting fiscal consolidation. It increased due to greater global interest rates and income from dollar sales, i.e., planned foreign exchange deals. Additionally, Rs 44,861 crore was allocated to the Contingency Fund.
• Gold Holdings: RBI’s gold holdings grew substantially by 52.1 per cent during 2024–25 and was one of the important factors in the growth in assets. The rise in gold holdings was due to higher gold prices globally, more new purchases (as gold is a safe-haven asset), global uncertainty, etc.

Fiscal Consolidation

• Central government reduces its fiscal deficit by its high tax revenues and thrust on capital expenditure. The central government’s gross fiscal deficit (GFD) reduced to 4.7 per cent of the GDP in 2024–25 down from 5.5 per cent the last year aided by robust tax revenues and higher capital expenditure.
• There was an increment of 5.2 per cent in capital expenditure and 5.8 per cent in revenue expenditure.
• For 2025–26, the fiscal deficit target is set at 4.4 per cent of the GDP, with projected increases in capital expenditure (10.1 per cent) and strong tax buoyancy.

External Sector

From April to December 2024, there was decent current account deficit (CAD), i.e., 1.3 per cent of the GDP slightly higher than US$ 30.7 billion accounting for 1.1 per cent of, the GDP. Besides, forex reserves were sufficient, i.e., US$ 668.3 billion by March 2025 covering 11 months of imports. These served as external buffers against capital flow volatility.  Also, net international investment position (NIIP) improved to –9.8 per cent of the GDP, reflecting strengthened external buffers.

Financial Inclusion

• The Financial Inclusion-Index improved to 64.2 in March 2024 from 60.1, reflecting broader access to financial services. Universal access has been achieved in 27 states and 8 union territories. The RBI in formulating the next National Strategy for Financial Inclusion (NSFI) for 2025–30, emphasising deeper outreach and improved literacy.
• The RBI continued to strengthen financial literacy initiatives, engaging over 1,58,000 students nationwide through RBI 90 Quiz. The Financial Literacy Week 2025 was dedicated to the theme ‘Financial Literacy, Women’s Prosperity’.

Currency Management and Digital Initiatives

• Currency in Circulation: Currency in circulation grew by 6.0 per cent by value and 5.6 per cent in volume during 2024–25, compared to a 7.8 per cent rise in value and 5.1 per cent in volume in the previous year.

Banknotes, coins, and central bank digital currency (CBDC) are in circulation in India. Currently, banknotes of denominations Rs 2, Rs 5, Rs 10, Rs 20, Rs 50, Rs 100, Rs 200, Rs 500 and Rs 2000 are circulated in India. Banknotes of denominations Rs 2, Rs 5, and Rs 2000 are not printed by RBI anymore. These old notes have been recycled into raw material to be used in furniture, thereby advocating sustainability. Further, currency management is getting digitised and automated by RBI, by accelerating its ‘Sa-Mudra’ project.

Coins of denominations 50 paise and Re 1, Rs 2, Rs 5, Rs 10, and Rs 20 are circulated currently in the country. At the moment, the most dominant currency in circulation is Rs 500 note.

• The Rs 500 denomination accounted for 40.9 per cent of total banknotes in circulation by volume and 87.5 per cent by value.
• As of March 31, 2025, Rs 3.56 lakh crore in Rs 2,000 banknotes had been withdrawn, with 98.2 per cent returned to the banking system.
• Coins in circulation grew by 9.6 per cent in value and 3.6 per cent in volume, supported by improved supply and distribution measures.
• Digital Payments and Infrastructure: Total payment system transactions grew by 34.8 per cent in volume during 2024–25. UPI transactions increased by 41.7 per cent in volume and 30.3 per cent in value. This shows that digital transactions are in more demand among the masses than cash transactions. The value of e` (or digital rupee) increased by 334 per cent during 2024–25. The RBI CBDC pilots in the coming year and aims to expand unified payments interface (UPI)’s global outreach to 20 countries by 2028–29 in conjunction with National Payments Corporation of India. This would facilitate programmability, offline functionality, and cross-border applications. 
• For further security and fraud prevention, the Central Payments Fraud Information Registry (CPFIR) coverage was extended to more banks. Also, real-time payee name validation was implemented for real time gross settlement (RTGS) and national electronic funds transfer (NEFT) to reduce rising fraud cases.

 Financial Sector Reforms

• Regulatory Overhaul: In order to strengthen the financial intermediaries, wide-ranging regulatory reforms will be implemented by the RBI. These reforms can be assessing loan-rate frameworks, employing the expected credit loss (ECL) model for categorisation of asset, reconsidering prudential guidelines for project finance, etc.
• Expansion of Payment Systems: Digital payments are gaining popularity amongst the masses for the ease of use and convenience. For instance, in March 2024, there were more than 13 billion transactions carried out on UPI in a single month. Around 14.3 per cent increment was observed in the number of point of sale (PoS) terminals, reaching the number up to 89 lakh. Besides, 16.1 per cent increment was observed in the number of Bharat QR codes deployment, reaching the number up to 62.5 lakh.
• Tackling Frauds in Financial Sector: According to the report, the number of fraud instances in banking sector has been increased by 13,564 in FY 2023–24 reaching up to 36,075. But there was a decline in the amount defrauded. The security and integrity of the financial system is being improved upon by the RBI, by adopting various effective measures.

Technology and Digital Transformation

• A new Greenfield data centre under Utkarsh 2.0 is expected to become operational in 2024–25 to enhance resilience.
• Development of a secure cloud facility by Indian Financial Technology and Allied Services (IFTAS) for financial sector data is underway, and the Global SFMS Hub has been established for cross-border payment messaging. (SFMS stands for State Financial Monitoring Bureau.)
• Red teaming cybersecurity exercises were also conducted to strengthen IT infrastructure. (Red teaming in cybersecurity is a simulated attack on an organisation’s systems and defences.)
• RBI launched the PRAVAAH portal to digitise regulatory applications and was conferred the Digital Transformation Award 2025. (PRAVAAH stands for platform for regulatory application, validation, and authorisation.)
• Additionally, the generative AI tool ‘ChiRAG’ was developed for efficient information extraction and synthesis, while Sarthi 2.0 was introduced to improve document management and enhance user experience.

Conclusion

The RBI Annual Report 2024–25 highlights the relentless efforts of the RBI in maintaining macro-economic stability, inclusive growth, integrating digital technology, and managing risks in an ever-changing global scenario. 

It acknowledges that India needs the consistent economic growth and financial stability. These can be achieved with the help of strategic policies and regulatory reforms. These reforms will also enable India to tackle various challenges like climate change, cybersecurity, and other global uncertainties effectively.

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