Summary: The Reserve Bank of India (RBI) announced its monetary policy on June 6, 2025, with Governor Sh. Sanjay Malhotra outlining key decisions. The Monetary Policy Committee reduced the policy repo rate by 50 basis points to 5.50% with immediate effect. This adjustment also led to changes in the standing deposit facility (SDF) rate to 5.25% and the marginal standing facility (MSF) rate and Bank Rate to 5.75%. The policy’s objective remains achieving a consumer price index (CPI) inflation target of 4% (−2) while supporting economic growth. The stance of monetary policy was changed from accommodative to neutral. Furthermore, the cash reserve ratio (CRR) will be reduced by 100 basis points to 3.0% of net demand and time liabilities (NDTL) in four staggered tranches of 25 basis points each, effective from September 6, October 4, November 1, and November 29, 2025. The real GDP growth for 2025-26 is projected at 6.5%, and CPI inflation at 3.7%. Corresponding notifications were issued to implement these changes, including revised penal interest rates on CRR and SLR shortfalls linked to the new Bank Rate.
RBI Monetary Policy June 2025: Key Rates and Measures
RBI Governor Sh. Sanjay Malhotra announced RBI monetary policy on 6th June 2025:
A. Resolution of Monetary Policy Committee
The various decisions taken in the meeting of Monetary Policy Committee are as follows. (RBI Monetary Policy- Resolution,Governor Statement Dated 06/06/2025)
- Reduce the policy repo rate by 50 basis points to 6.00 per cent with immediate effect. Consequently, the standing deposit facility (SDF) rate under the liquidity adjustment facility (LAF) shall stand adjusted to 5.25 per cent and the marginal standing facility (MSF) rate and the Bank Rate to 5.75 per cent.
- This decision is in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth.
- Change the stance from accommodative to neutral. After having reduced the policy repo rate by 100 bps in quick succession since February 2025, under the current circumstances, monetary policy is left with very limited space to support growth.
- Reduction in cash reserve ratio (CRR) by 100 basis points (bps) to 3.0 per cent of net demand and time liabilities (NDTL) in a staggered manner during the course of the year. This reduction will be carried out in four equal tranches of 25 bps each with effect from the fortnights beginning September 6, October 4, November 1 and November 29, 2025.
- The real GDP growth projected for 2025-26 at 6.5%. (previous estimate 6.5%)
- The CPI Inflation projected for 2025-26 at 3.7%. (previous estimate 4.0%)
- The updated policy rates are Repo- 5.50%, SDF- 5.25%, MSF and Bank Rate- 5.75%, CRR- 3.0%, SLR- 18.0%, Fixed Reverse Repo- 3.35%.
B. Related Notifications issued by RBI
The various notifications issued by RBI to implement the decisions of MPC are as follows:
Liquidity Adjustment Facility- Change in rates: It has been decided by the Monetary Policy Committee (MPC) to reduce the policy repo rate under the Liquidity Adjustment Facility (LAF) by 50 basis points from 6.00 per cent to 5.50 per cent with immediate effect. Consequently, the standing deposit facility (SDF) rate and marginal standing facility (MSF) rate stand adjusted to 5.25 per cent and 5.75 per cent respectively, with immediate effect. (RBI Notification 42/2025 Dated 06/06/2025)
Standing Liquidity Facility for Primary Dealers: The Standing Liquidity Facility provided to Primary Dealers (PDs) (collateralised liquidity support) from the Reserve Bank would be available at the revised repo rate of 5.50 per cent with immediate effect. (RBI Notification 43/2025 Dated 06/06/2025)
Penal Interest on shortfall in CRR and SLR requirements- Change in Bank Rate: All penal interest rates on shortfall in CRR and SLR requirements, which are specifically linked to the Bank Rate, stands revised. The existing rates (depending on duration of shortfall) Bank Rate plus 3.0 percentage points (9.25 per cent) or Bank Rate plus 5.0 percentage points (11.25 per cent) are revised to Bank Rate plus 3.0 percentage points (8.75 per cent) or Bank Rate plus 5.0 percentage points (10.75 per cent). (RBI Notification 45/2025 Dated 06/06/2025)
Maintenance of Cash Reserve Ratio (CRR): iI has been decided to reduce the Cash Reserve Ratio (CRR) of all banks by 100 basis points in four equal tranches of 25 basis points each to 3.0 per cent of net demand and time Liabilities (NDTL). Accordingly, banks are required to maintain the CRR at 3.75 per cent, 3.5 per cent, 3.25 per cent and 3.0 per cent of their NDTL effective from the reporting fortnight beginning September 6, October 4, November 1 and November 29, 2025, respectively. (RBI Notification 46/2025 Dated 06/06/2025)
C. Statement on Development and Regulatory Policies
No such document is issued as part of Monetary Policy this time.
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Disclaimer: The contents of this article are for informational purposes only. The user may refer to the relevant notification/ circular/ decisions issued by the respective authorities for specific interpretation and compliances related to a particular subject matter)
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