RBI Annual Report 2024–25: A Comprehensive Overview of India’s Central Banking Landscape

The Reserve Bank of India (RBI) has released its Annual Report for the financial year 2024–25, as required by Section 53(2) of the RBI Act, 1934. This comprehensive document outlines the state of the Indian economy, RBI’s financial performance, key trends in banking and digital payments, and its policy plans for the coming year. It reflects the central bank’s continuing efforts to ensure economic stability, encourage digital transformation, and manage risks in an increasingly volatile global environment.

1. RBI’s Financial Performance and Balance Sheet

The RBI’s balance sheet showed solid growth this year. As of March 31, 2025, it stood at ₹76.25 lakh crore, up from ₹70.47 lakh crore a year ago. This represents an increase of 8.21%, showing the central bank’s expanding role in managing the economy.

Assets Growth:

• A 52.09% increase in gold holdings played a major role in this expansion.
• Domestic investments also rose by 14.32%, reflecting strong policy support.
• Foreign investments grew more modestly at 1.70%, affected by global uncertainties.

Liabilities Side:

• The increase came largely from a rise in currency in circulation, higher balances in revaluation accounts, and market-related operations.

Income and Expenditure:

• RBI’s total income reached ₹3.38 lakh crore, a 22.77% increase from the previous year’s ₹2.76 lakh crore.
• Expenditure also rose, reaching ₹69,714 crore, which is 7.76% more than last year.
• Despite this, the RBI transferred a record surplus of ₹2.69 lakh crore to the Central Government, showcasing effective financial management.
• It also added ₹44,861 crore to its Contingency Fund, which is used during financial emergencies.

2. Currency Circulation and the Shift to Digital Payments

One of the key changes in India’s economy is the increasing shift from cash to digital modes of payment.

Cash Trends:

• The currency-to-GDP ratio declined to 11.2%, down from earlier levels. This means a smaller share of the economy now uses physical cash.
• However, currency in circulation still grew by 5.8%, suggesting continued demand for cash, especially in rural areas.
• The ₹500 note continued to be the most used, both in volume and value.

Digital Payment Growth:

• Retail digital payments increased by 17.9% in value and 35% in volume, showing wider usage of apps like UPI.
• The Digital Rupee (CBDC) also made strong progress. Its circulation value grew by 334%, reaching ₹1,016.5 crore.

This shows that while cash is still important, more people and businesses are turning to digital transactions.

3. Foreign Investment and Corporate Bond Markets

The RBI also monitors foreign investment in India’s financial markets.

• In FY25, Foreign Portfolio Investment (FPI) in corporate bonds rose by 11.4%, totaling ₹1.21 lakh crore.
• However, the percentage of limit used declined slightly to 15.8% (from 16.2%), not because of reduced interest but due to a higher investment cap.

This indicates that foreign investors remain confident, and there is room for further investment.

4. Currency Printing and Counterfeit Notes

As part of managing the currency supply, the RBI prints banknotes every year.

• In FY25, ₹6,373 crore was spent on currency printing, a 25% increase from the previous year.
• The increase was driven by higher demand for new notes and replacement of old ones.

Fake Notes Concern:

• A rise in counterfeit ₹500 notes was recorded, with cases increasing by 37.3%.
• Fake ₹200 notes also saw a 13.9% rise.
• Other denominations saw a drop, but overall counterfeiting remains a concern, pushing the RBI to strengthen security features.

5. Economic Growth and Inflation Outlook

The RBI is optimistic about India’s economic growth.

• Real GDP growth for FY26 is projected at 6.5%, supported by:

1. Higher consumer spending,
2. Strong government capital expenditure, and
3. A growing services sector.

• India’s banking and corporate sectors are also in good health, contributing to this growth.

Inflation Expectations:

• The RBI aims to keep inflation at around 4%.
• This depends on normal monsoons, strong food supply, and stable global oil prices.
• However, the report warns of risks from climate change, geopolitical tensions, and global trade disruptions.

6. Cybersecurity and Digital Banking Reforms

As digital banking grows, the RBI is working to improve online safety.

• In February 2025, it proposed a new internet domain: ‘bank.in’, to ensure that users only access verified banking websites.
• This aims to reduce phishing, identity theft, and fraud.

UPI Advancements:

• The ‘UPI Circle’ feature lets trusted individuals make payments from your account.
• Small Finance Banks are now allowed to offer pre-approved credit lines via UPI, helping people access short-term loans easily.
• RBI is also working to connect UPI with international payment systems, which will simplify foreign remittances.

7. Gold Reserves and Exchange Rate Management

• The RBI increased its gold holdings by 54.13 metric tonnes, and the total value rose to ₹4.32 lakh crore, a 57.12% rise.
• This was due to new purchases, higher global gold prices, and a weaker Indian rupee.

The RBI will continue managing the rupee exchange rate through foreign exchange market interventions to avoid sharp volatility.

8. Banking Sector Health and Frauds

Fraud Cases:

• Although the number of bank frauds fell, the total value of frauds tripled to ₹36,014 crore.
• This was due to reporting of old frauds (legacy cases), including 122 frauds worth over ₹18,000 crore that were not recorded earlier.

Urban Cooperative Banks (UCBs):

• UCBs showed improvement:

1. Credit growth increased,
2. Capital strength improved,
3. Non-performing assets (bad loans) fell.

• The RBI extended Risk-Based Supervision and Prompt Corrective Action (PCA) frameworks to cover more UCBs, boosting transparency.

9. Household Savings and Capital Market Activity

Household Financial Savings:

• Gross financial savings rose to 11.2% of income, from 10.7% last year.
• Net savings rose to 5.1%, indicating better personal money management.

Stock Market Trends:

• Companies raised ₹2.2 lakh crore via Qualified Institutional Placements (QIPs) and preferential shares.
• Another ₹2.1 lakh crore came from IPOs, FPOs, and rights issues.
• This shows high investor confidence and growing corporate expansion.

10. Promoting INR in Global Trade

To make the Indian Rupee more important in international trade, the RBI has taken several steps:

• NRIs and foreigners can now hold INR accounts abroad.
• RBI signed Local Currency Settlement (LCS) agreements with:

1. UAE
2. Indonesia
3. Maldives
4. Mauritius

• These deals allow trade to happen directly in local currencies, reducing reliance on the US dollar.
• The RBI also plans to connect its forex platform FX-Retail with NPCI’s Bharat Connect for easier access to forex trading.

11. India’s International Trade Outlook

Despite global challenges like:

• Rising geopolitical tensions
• Protectionist trade policies
• Tariff uncertainties

India’s trade position is supported by:

• 14 Free Trade Agreements (FTAs)
• 6 Preferential Trade Agreements (PTAs)
• Ongoing talks with the USA, EU, Oman, and Peru for new trade deals.

This may help protect Indian exports and support economic growth.

Fast Facts: RBI at a Glance

• Established: April 1, 1935
• Legal Authority: RBI Act, 1934
• Governor (2025): Sanjay Malhotra
• Headquarters: Mumbai, Maharashtra