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Key Points

The Reserve Bank of India reported a significant increase in average daily money market volumes, reaching Rs 5.5 lakh crore in the fiscal year 2025. Despite deposit growth trailing behind credit growth, the latter saw broad-based expansion, particularly in retail and agriculture sectors. Public sector banks outpaced private ones in terms of credit growth, reflecting a proactive lending strategy. G-sec yields demonstrated less volatility compared to global benchmarks, while a depreciating Indian rupee marked the latter half of the year due to external economic factors.

Key Points: RBI Reports 10% Surge in Money Market to Rs 5.5 Lakh Crore

  • Money market daily volume increased to Rs 5.5 lakh crore in FY25
  • Credit growth outpaced deposits with PSBs leading
  • G-sec yields less volatile amid global shifts
3 min read

Daily volume in money market surged by 10% YoY to Rs 5.5 lakh crore in FY25: RBI

Money market volume surged by 10% in FY25, reaching Rs 5.5 lakh crore, per RBI.

"Public sector banks recorded higher credit growth than private sector banks. - RBI Report"

Mumbai, May 29

The Reserve Bank of India (RBI) has reported a sharp rise in money market activity and sustained momentum in bank credit growth during the financial year 2024-25.

According to the central bank's latest report, the average daily volume in the money market rose by 10 per cent to Rs 5.5 lakh crore during 2024-25 compared to the previous year.

The report noted that both bank deposits and credit continued to grow at a double-digit pace during the year. Although deposit growth lagged behind credit growth, however the gap narrowed over the course of the year.

Notably, public sector banks (PSBs) recorded higher credit growth than private sector banks, highlighting their active lending approach.

According to the report, bank credit expansion was broad-based, with strong contributions from the retail, services, and agriculture sectors.

The central bank stated that credit to agriculture and allied activities maintained double-digit growth throughout the year. Industrial credit remained robust, supported by a pick-up in lending to medium and large industries.

However, credit to micro and small industries showed some moderation in recent months.In terms of interest rates, the report said money market rates remained broadly aligned with the policy repo rate throughout 2024-25. Meanwhile, government securities (G-sec) yields softened and showed less volatility compared to global and emerging market counterparts.

The Indian rupee (INR) witnessed a depreciating trend in the second half of the year due to a stronger US dollar and equity portfolio outflows.

The report also provided a detailed quarterly analysis of Government Securities yield movements. The first quarter (Q1:2024-25) saw G-sec yields move both ways. Yields initially rose due to foreign portfolio investment (FPI) outflows and rising crude oil prices. However, they softened later following the RBI's record surplus transfer to the government.

The second quarter (Q2:2024-25) witnessed a steeper yield curve, with short-term G-sec yields falling more than long-term ones. This was driven by declining crude oil prices, steady FPI inflows, and the start of a global rate-cutting cycle, including a 50-basis point cut by the US Federal Reserve.

The third quarter saw range-bound movements in G-sec yields. Upward pressure from rising US Treasury yields and domestic inflation was partially offset. Q4:2024-25 experienced a downward trend in yields due to liquidity infusion measures and the RBI's move to ease monetary policy.

By the end of the financial year, the 10-year generic G-sec yield stood at 7.01 per cent, marking a 5 basis point decline from its level at the end of March 2024.

- ANI

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Reader Comments

R
Rajesh K.
Good to see PSBs leading in credit growth! Shows our public sector banks are becoming more competitive. But I hope this lending boom doesn't lead to more NPAs later. RBI should keep strict watch on loan quality. 🇮🇳
P
Priya M.
As someone working in agri-finance, I'm happy to see double-digit growth in farm credit! 🚜 This is crucial for rural economy. But banks must ensure loans reach small farmers, not just big agri-businesses. More financial literacy programs needed in villages.
A
Amit S.
The rupee depreciation is worrying. While RBI has managed it well so far, we need to attract more stable FDI instead of volatile FPI flows. Make in India should focus on export-oriented manufacturing to strengthen forex position.
S
Sunita R.
Why is credit to micro/small industries slowing down? These are the backbone of our economy! Banks need to simplify loan processes for MSMEs. The paperwork is still too much for small business owners. #SupportSmallBusiness
V
Vikram J.
The 10% growth in money market volume shows increasing financialization of our economy. More Indians are moving from physical assets to financial instruments. Good for long-term growth, but RBI must ensure proper investor protection measures.
N
Neha P.
As a retail investor, I'm happy with stable G-sec yields. But RBI should explain more clearly how their surplus transfer affects markets. Sometimes policy moves feel unpredictable for common investors. More transparency please! 🤔

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