The Reserve Bank of India (RBI) dropped its annual report for FY25 last week. So in today’s Finshots, we break down the key highlights that really matter.

And yeah, just a heads up. Since this story is based on a 300+ page report, it’s going to take a little longer than usual.

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The Story

Again today, we’re ditching the regular story format and diving straight into what’s in the report.

Let’s begin with the accounts themselves. You probably know that this year, the RBI transferred a whopping ₹2.69 lakh crore in surplus to the government. That’s a 27% jump over the previous year and its highest ever!

So, what led to this bumper bonanza?

For starters, there were higher interest earnings. The RBI earned significantly more from foreign investments and interest on domestic securities. Think of it like getting better returns from its fixed deposits — both abroad and at home.

Then, a large chunk of the income came from the sale and smart revaluation of foreign exchange reserves. When the value of foreign bonds or currencies went up, the RBI made gains just by holding them. These are called mark-to-market gains, kind of like your investments rising in value even if you haven’t sold them. And when it did sell some of these assets, it locked in profits. These gains — from both rising values and actual sales — added a lot of money to the RBI’s account.

On the expense side, while printing currency cost a bit more — ₹6,372 crores vs. ₹5,101 crores last year — overall, the RBI managed its expenses well, which rose by only about 8%.

But the RBI didn’t just hand over all the gains to the government.

It beefed up its Contingency Fund, essentially its rainy-day kitty, from ₹4.28 lakh crore to ₹5.42 lakh crore, adding nearly ₹1.13 lakh crore. This move strengthens its financial cushion and shows careful planning for tough times ahead.

The Economic Capital — the RBI’s capital buffer as a percentage of its balance sheet, now stands at 7.5% under its revised capital framework (We’ve written about this here).

Speaking of the balance sheet…

The RBI’s total assets grew by 8% to ₹76.25 lakh crore, driven mainly by a rise in foreign currency assets and increased liquidity operations.

Its foreign exchange reserves stood strong, and despite global volatility, they played a key role in RBI’s income stream this year.

With that out of the way, let’s get into some of the other interesting highlights from the annual report.

#1 How the real economy grew

India’s real GDP growth for FY25 slowed to 6.5%, down from 9.2% last year. But even with the dip, India remained one of the fastest-growing major economies in the world.

So, what caused the slowdown?

Let’s start with spending — the fuel for any economy. People spent more in FY25, with private consumption rising by 7.6%. Most of that push came from rural India. A good farming season meant folks in villages bought more two-wheelers, tractors and daily-use items. But city spending cooled off a bit.

The government also opened its wallet, though not as generously as before. Its spending grew by 3.8%, slower than last year’s 8.1%. Exports outpaced imports too, giving the economy another leg up.

Then there are investments — the building blocks for future growth.

The share of investment in GDP slipped from 32.6% in FY23 to 31.4% in FY24, mostly because foreign investors pulled back. And signs show that investment growth has slowed down even further in FY25. Even domestic investment lost steam. Spending on infrastructure and machinery rose just 6.1%, down from 8.8%. The government tightening its belt on big projects didn’t help either. That hit demand for cement, steel and capital goods.

Still, there was a flicker of optimism. Factories ran at higher capacity and businesses saw more demand toward the end of the year.

On the savings front, things held steady. Households saved about 30% of their disposable income. Net household financial savings — that’s savings minus debt, nudged up to 5%.

For the agriculture sector, FY25 was a bounce-back year, thanks to a generous monsoon. It arrived early and brought much-needed rain, helping refill reservoirs that had dipped to a five-year low. With more water, farmers planted more, and the area under foodgrains and oilseeds expanded. Foodgrain output hit record highs, along with strong harvests of fruits and vegetables. The government also hiked Minimum Support Prices (MSPs), ensuring at least 50% more than the cost of production.

Stockpiles were in good shape too. So, the government eased rice export restrictions and sold wheat in the open market to keep prices in check.

But the industrial and services sectors couldn’t keep pace. Industry grew by just 4.3%, down from 11% last year, dragged by cooling manufacturing. Services lost some steam in the first half, though things looked better later.

Meanwhile, the job market had some good news. The Labour Force Participation Rate (LFPR) and Worker Population Ratio (WPR) hit record highs, thanks to more women joining the workforce. Urban unemployment dipped, though rural joblessness ticked up slightly.

And yes, we can’t talk about the economy without mentioning inflation. Headline inflation dropped to 4.6%, from 5.4% the year before.

#2 How money moved

The RBI’s base money, also called reserve money, grew by 5.8%. Think of this as the bedrock of all money in the economy. It includes currency in circulation and the money banks park with the RBI. This growth was slower than last year’s 6.7%, and that’s largely because of a temporary policy twist in August 2023.

Back then, the RBI asked banks to park more funds with it under something called the incremental Cash Reserve Ratio (CRR). That move had caused a spike in the previous year’s numbers, so this year’s growth looks slower in comparison.

Now, the biggest chunk of base money is the cash you and I use or currency in circulation. It made up about 77% of the total, and it grew by 5.8% this year, up from 4.1% last year. One reason? The impact of the withdrawal of ₹2,000 notes faded.

Meanwhile, banks’ deposits with the RBI (to meet CRR requirements) actually shrank by 6.5%. That’s because the RBI later cut the CRR by 0.5%, and overall bank deposit growth slowed down. But here’s the catch. If you leave the CRR cut out of the picture, those deposits actually grew by 4.4%.

#3 How the global economy is doing

The global economy’s heading into choppy waters in 2025 and 2026. Growth is expected to slow to 2.8% in 2025 and 3.0% in 2026 — down from 3.3% in 2024. A mix of slowing inflation, high government debt, ongoing wars, trade tensions and climate shocks is keeping things uncertain. And while advanced economies are expected to cool off, emerging markets might hold up a bit better.

Inflation is easing, but rising service prices and new tariffs could still stir the pot. Global trade could even shrink by 0.2% this year.

Meanwhile, heavy debt and volatile financial markets are flashing warning signs. And looming risks from climate change to AI disruptions and crypto wildcards, are keeping policymakers on their toes.

#4 Some other interesting bits we observed

Why’s e₹ circulation up 334%?

The digital rupee (e₹) in circulation shot up by a whopping 334% in FY25. But hold on. It’s not like you and I are using it at shops or online, right?

So what’s behind the spike?

Turns out, it’s mostly pilot programmes involving banks, fintechs like MobiKwik and CRED and even government bodies.

That said, the RBI is quietly adding some smart features to the retail version of e₹. You can now use it without the internet, which is great for remote areas. And it’s programmable, meaning the money can be earmarked for specific uses like food, fuel or school fees. These features are being tested in schemes like Direct Benefit Transfers, subsidies and employee allowances. In Odisha, for instance, 88,000 people under the Subhadra Yojana are getting benefits via e₹. It’s also being tested for farm subsidies, carbon credit payments and more.

Gold loans are getting murky

Gold loans have grown quite a bit over the past few years. But that also made the RBI pause and take a closer look at how banks and NBFCs are handling them.

And well, what they found wasn’t all that shiny.

Lenders were leaning too heavily on third-party agents to scout for customers and value the gold. And in many cases, they were doing it rather carelessly. Sometimes the gold was being valued without the borrower even present. Background checks were patchy. There was little oversight on how the loan money was being used. And when people couldn’t repay, the auction process lacked transparency. Even the loan-to-value (LTV) ratio, which tells you how much money is loaned against the gold, wasn’t being properly tracked.

So, the RBI stepped in and asked lenders to tighten things up with better underwriting, stricter collateral rules and closer monitoring of how the funds are used. It also proposed a uniform cap that gold loans shouldn’t exceed 75% of the gold’s value.

And while all of that sounds fair, the Finance Ministry’s a bit worried. See, these new rules might end up hurting small-ticket borrowers — especially folks seeking loans under ₹2 lakh. Many of them are rural households, small farmers or even housewives, who use gold loans for urgent needs or farming expenses. If documentation becomes too tedious and LTV caps too strict, they could struggle to access quick credit and might even fall back on informal lenders.

So yeah, that’s pretty much it. There’s a lot more out there, of course. But this should keep you up to speed for now.

Until then…

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