Publications

	Volume XXI | Issue 4 | July 2025 MONETARY & CREDIT INFORMATION REVIEW

I. Regulation

Reserve Bank of India (Pre-payment Charges on Loans) Directions, 2025

The Reserve Bank on July 2, 2025, issued the Reserve Bank of India (Pre-payment Charges on Loans) Directions, 2025, to ensure consistency and transparency in the levy of pre-payment charges across Regulated Entities (REs). These Directions aim to address customer grievances arising from inconsistent practices and restrictive clauses in loan agreements, particularly affecting Micro and Small Enterprises (MSEs). Effective from January 1, 2026, the Directions prohibit REs from levying pre-payment charges on floating rate loans granted to individuals for non-business purposes and to individuals and MSEs for business purposes, subject to specific conditions based on the category of RE and sanctioned loan amount. The Directions are applicable to all commercial banks (excluding payment banks), co-operative banks, NBFCs and All India Financial Institutions.

The Directions also mandate that the terms regarding pre-payment charges must be clearly disclosed in the sanction letter, loan agreement and, where applicable, the Key Facts Statement (KFS). Charges not disclosed upfront cannot be imposed later and no retrospective fees or charges waived earlier can be levied at the time of pre-payment. Additionally, borrowers will not be charged pre-payment fees if they opt not to renew a cash credit or overdraft facility and notify the RE in advance. These Directions supersede earlier instructions detailed in specified RBI circulars and Master Directions, which stand repealed from the effective date. To read more, please click here.

Basel III Capital Regulations – External Credit Assessment Institutions (ECAIs) – CareEdge Global IFSC Limited

The Reserve Bank on July 10, 2025, permitted banks to use the ratings of M/s CareEdge Global IFSC Limited, in addition to Fitch, Moody’s and Standard & Poor’s, for risk-weighting their claims on non-resident corporates originating at the International Financial Services Centre (IFSC), under Paragraph 6 of the Master Circular – Basel III Capital Regulations dated April 01, 2025. The rating-risk weight mapping for the ratings assigned by M/s CareEdge Global IFSC Limited shall be as follows:

To read more, please click here.

Lending Against Gold and Silver Collateral - Voluntary Pledge of Gold and Silver as Collateral for Agriculture and MSME Loans

The Reserve Bank on July 11, 2025, clarified that loans sanctioned by banks to Agriculture and MSME borrowers against the voluntary pledge of gold and silver as collateral—up to the prescribed collateral-free limit—will not be treated as a violation of the existing guidelines on collateral-free loans, as outlined in the circular dated December 6, 2024 and the Master Direction on Lending to MSME Sector dated July 24, 2017 (updated as on June 11, 2024) and as per the Lending Against Gold and Silver Collateral Directions, 2025 issued on June 6, 2025. To read more, please click here.

RBI issues draft Master Direction – Digital Banking Channels Authorisation (Directions), 2025

The Reserve Bank on July 21, 2025 released the draft Master Direction on ‘Digital Banking Channels Authorisation’. The comments on the draft Directions are invited from public/stakeholders till August 11, 2025. To read more, please click here.

RBI issues draft Master Direction – Business Authorisation for Co-operative Banks (Directions), 2025

The Reserve Bank on July 28, 2025 released the draft Master Direction on Business Authorisation for Co-operative Banks. The comments on the draft Directions are invited from public/stakeholders till August 25, 2025. To read more, please click here.

RBI cancels the licence of The Karwar Urban Co-operative Bank Ltd.

The Reserve Bank of India, vide order dated July 22, 2025, cancelled the licence of The Karwar Urban Co-operative Bank Ltd., Karwar, with effect from the close of business on July 23, 2025, due to its inadequate capital, poor compliance and inability to protect depositor interests or repay deposits fully. To read more, please click here.

Action against NBFCs

The seven Non-Banking Financial Companies (NBFC) have surrendered the Certificate of Registration (CoR) granted to them by the Reserve Bank of India (RBI). The RBI, in exercise of powers conferred on it under Section 45-IA (6) of the Reserve Bank of India Act, 1934, has therefore cancelled their CoR. To read more, please click here.

The Reserve Bank of India, in exercise of powers conferred on it under Section 45-IA (6) of the Reserve Bank of India Act, 1934, has cancelled the Certificate of Registration of 10 NBFCs. To read more, please click here.

The Reserve Bank on July 21, 2025, restored the Certificate of Registration (CoR) of Jupiter Management Services Private Limited (CoR No.: N-14.03654), a Non-Banking Financial Company (NBFC), following orders from the Appellate Authority/Courts. The NBFC, headquartered at S.C.O No. 20, District Commercial Centre, Sector-56, Gurgaon, Haryana, is directed to comply with the RBI Act, 1934 and all applicable guidelines, including reporting obligations. To read more, please click here.

Review of Citizen’s Charter of Reserve Bank of India

The Reserve Bank on July 1, 2025, implemented a revised Citizen’s Charter consolidating all services offered to regulated entities and citizens, increasing the total to 204 services by subsuming the earlier 133 regulatory approvals and 58 Citizen’s Charter services. As part of a comprehensive review, timelines for 11 services have been reduced to enhance efficiency. Applications and requests can now be made through PRAVAAH (180 services), over-the-counter/offline forms (14 services) and other online platforms like the Auditor Allocation System and e-Kuber (10 services). This revision underscores the RBI’s commitment to improving accessibility, responsiveness and transparency, with ongoing efforts to digitise workflows and service interfaces. User manuals, FAQs and video tutorials are available on PRAVAAH at https://pravaah.rbi.org.in.

II. Financial Market

RBI releases Draft Reserve Bank of India (Novation of OTC Derivative Contracts) Directions, 2025

The Reserve Bank on July 9, 2025 placed on its website Draft Reserve Bank of India (Novation of OTC Derivative Contracts) Directions, 2025. Comments on the draft Directions are invited from banks, market participants and other interested parties by August 01, 2025. To read more, please click here.

III. Foreign Exchange

Directions related to Closure of Shipping Bills in the Export Data Processing and Monitoring System (EDPMS) – Draft for Feedback

The Reserve Bank on July 11, 2025, released draft Directions aimed at simplifying the reconciliation process in the Export Data Processing and Monitoring System (EDPMS), particularly for small-value export transactions, in view of the growing volume of export data integrated from Customs (via ICEGATE), ECCS and, from January 2025, postal exports. Introduced in 2014 to monitor export realisations, EDPMS now reconciles each shipping bill against received payments. Comments on the draft Directions may be submitted via the ‘Connect 2 Regulate’ section on the RBI website or emailed by July 31, 2025, with the subject line “Feedback on draft directions on closure of shipping bills in EDPMS.” To read more, please click here.

IV. Issuer of Currency

Withdrawal of ₹2000 denomination Banknotes

The Reserve Bank on August 1, 2025 released the status of withdrawal of ₹2000 denomination banknotes. As per the data, the total value of ₹2000 banknotes in circulation declined to ₹6017 crore at the close of business on July 31, 2025. Thus, 98.31 percent of the ₹2000 banknotes in circulation as on May 19, 2023 has since been returned. The ₹2000 banknotes continue to be legal tender.

V. Supervision

Monetary Penalty

The Reserve Bank imposed monetary penalty (above ₹1 lakh) during the month of July 2025 on the following entities under various sections of Banking Regulation Act, 1949 and Reserve Bank of India Act, 1934.

VI. Surveys

Survey on International Trade in Banking Services (ITBS): 2024-25

The Reserve Bank on July 1, 2025 launched the 2024-25 round of its Survey on International Trade in Banking Services (ITBS). The survey, conducted annually since 2006-07, provides information on financial services rendered by branches/subsidiaries/joint ventures of Indian banks operating abroad and branches/subsidiaries of foreign banks operating in India, based on explicit / implicit fees / commission charged to customers. To read more, click here.

Quarterly Order Books, Inventories and Capacity Utilisation Survey: April - June 2025 (Round 70)

The Reserve Bank on July 7, 2025 launched the 70th round of its Order Books, Inventories and Capacity Utilisation Survey (OBICUS). The survey is for the reference period April – June 2025 (Q1:2025-26).

The Reserve Bank has been conducting the Order Books, Inventories and Capacity Utilisation Survey (OBICUS) of the manufacturing sector on a quarterly basis since 2008. The information collected in the survey includes quantitative data on new orders received during the reference quarter, backlog of orders at the beginning of the quarter, pending orders at the end of the quarter, total inventories with a breakup between finished goods (FG), work-in-progress (WiP) and raw material (RM) inventories at the end of the quarter, item-wise production in terms of quantity and value during the quarter vis-à-vis the installed capacity from the targeted group and the reasons for changes in production / installed capacity during the quarter. To read more, please click here.

46th Round of Quarterly Services and Infrastructure Outlook Survey (SIOS) Q2:2025-26

The Reserve Bank on July 15, 2025 launched the 46th round of the quarterly Services and Infrastructure Outlook Survey (SIOS) for the reference period July-September 2025. The survey assesses the business situation for the current quarter (Q2:2025-26) from selected companies in the services and infrastructure sectors in India and their expectations for the ensuing quarter (Q3:2025-26) based on qualitative responses on a set of indicators pertaining to demand conditions, financial conditions, employment conditions and the price situation. The outlook on key parameters for the two subsequent quarters (Q4:2025-26 and Q1:2026-27) are also covered.

111th Round of Quarterly Industrial Outlook Survey (IOS) - Q2:2025-26

The Reserve Bank on July 15, 2025 launched the 111th round of the quarterly Industrial Outlook Survey (IOS) of the Indian manufacturing sector for the reference period July-September 2025. The survey assesses business sentiments for the current quarter (Q2:2025-26) and expectations for the ensuing quarter (Q3:2025-26), based on qualitative responses on a set of indicators pertaining to demand conditions, financial conditions, employment conditions and the price situation. The outlook on key parameters for the two subsequent quarters (Q4:2025-26 and Q1:2026-27) are also covered. To read more, please click here.

VII. Debt Manager to Government

Floating Rate Savings Bond, 2020

The Reserve Bank on July 1, 2025, announced that the interest rate on the Floating Rate Savings Bonds, 2020 (Taxable) [FRSB 2020 (T)] for the period from July 1, 2025, to December 31, 2025, remains unchanged at 8.05%. As per Para 13(ii) of Government of India Notification F.No.4(10)-B(W&M)/2020 dated June 26, 2020, the coupon rate on these bonds is reset half-yearly and is linked to the prevailing National Savings Certificate (NSC) rate with a spread of (+) 35 basis points. Accordingly, with the NSC rate at 7.70%, the applicable rate for this period is 8.05%, payable on January 1, 2026.

VIII. Publication

RBI Bulletin

The Reserve Bank on July 23, 2025 released the July 2025 issue of its monthly Bulletin. The Bulletin includes four speeches, four articles and current statistics.

The four articles are:

I. State of the Economy: The global macroeconomic environment remained fluid in June and July so far. In the first fortnight of June, concerns about the rapid escalation of geopolitical tensions between Iran and Israel led to a marked uptick in market volatility. The announcement of a ceasefire on June 23, however, restored normalcy in global markets. Progress on several bilateral trade deals provided further impetus to the overall optimism. By early July, however, concerns around fiscal health of the US, tariff policy uncertainties and their implication for growth and inflation weighed on the evolving economic outlook. To read more, please click here.

II. Revisiting the Oil Price and Inflation Nexus in India: The oil price-inflation relationship has been a vexing issue for economists and central bankers for more than half a century. Since the twin oil price shocks of the 1970s, economists have endeavoured to delineate the impact of oil price shocks on aggregate economic activity. This is particularly important for oil importers as oil price surges have often been associated with a downturn in economic growth and worsening trade and current account balances. Generally, oil price fluctuations can be highly distortionary as adverse shocks (higher oil prices) can ratchet up inflation and unhinge inflation expectations. Therefore, monetary authorities – more so in inflation targeting (IT) economies – are keen observers of the evolving oil price dynamics. To read more, please click here.

III. Determinants of Overnight Uncollateralised Money Market Volume- An Empirical Assessment: The Indian money market is segmented into short-term unsecured loans (call), collateralised lending and borrowing (including repurchase agreements), commercial papers (CPs), certificates of deposit (CDs) and treasury bills (T-bills). To read more, please click here.

IV. Household Inflation Expectations in India: Emerging Trends, Determinants and Impact of Monetary Policy: Inflation expectations significantly influence economic behaviour and macroeconomic outcomes. They shape individual decisions about consumption, saving and investment, directly impacting aggregate demand. Businesses use these expectations to set prices and negotiate wages. Therefore, central banks prioritise managing inflation expectations to maintain price stability, especially in the inflation targeting (IT) framework. To read more, please click here.

Four Speeches are: I. Catalysing Sustainable & Green Infrastructure Financing for Achieving Net Zero - Inaugural Address delivered by Shri M Rajeshwar Rao, Deputy Governor, Reserve Bank of India - July 03, 2025 - at the Conference on Green Infrastructure Finance at College of Agriculture Banking, RBI, Pune;

II. Bridging the Credit Gap: The Evolution of India’s Credit Reporting Infrastructure - Keynote Address delivered by Shri M Rajeshwar Rao, Deputy Governor, Reserve Bank of India - July 01, 2025 - at TransUnion CIBIL’s Credit Conference in Mumbai;

III. Reflections from a Banker’s Journey - Valedictory Speech by Shri Swaminathan J, Deputy Governor, Reserve Bank of India - July 12, 2025 - at the National Institute of Bank Management (NIBM), Pune; and

IV. Working Together, Growing Stronger: Responsible Governance for a Resilient UCB Sector - Valedictory Address by Shri Swaminathan J, Deputy Governor, Reserve Bank of India at the Seminar for Directors of Urban Co-operative Banks held in CAB, Pune on Friday, July 11, 2025. To read more, please click here.

IX. Data Releases

Important data and surveys released by the Reserve Bank during the month of July 2025 are as follows:

Edited and published by Puneet Pancholy for Reserve Bank of India, Department of Communication, Central Office, Shahid Bhagat Singh Marg, Mumbai - 400 001. MCIR can be also accessed at https://mcir.rbi.org.in.