RBI Annual Report FY 2025-26: Money and Credit — Reserve Money, Deposits, Bank Credit and Sectoral Lending

The RBI Annual Report FY 2025-26 presents a significant shift in India’s monetary and credit conditions: reserve money adjusted for the first-round effect of CRR changes grew 10.8%, broad money M3 grew 13.0%, and bank credit to the commercial sector expanded 15.7% during the year. At the same time, bank deposit growth remained below credit growth for much of the year, creating a persistent wedge between deposits and credit.

This makes the chapter particularly important for RBI Grade B, RBI promotion examinations, UPSC, IBPS and banking interviews. Questions can come directly from the numbers, but the more important examination theme is the relationship:

Reserve Money → M3 → Deposits → Bank Credit → Sectoral Credit → Credit-Deposit Gap → Alternative Sources of Finance

The Annual Report’s money-and-credit chapter also connects monetary expansion with currency demand, digital payments, CRR changes, financial deepening, MSME lending and non-bank financing.

1. The Money and Credit Story of 2025-26

The broad picture can be summarised in five developments:

Reserve money growth accelerated
Currency in circulation grew strongly
M3 growth increased sharply
Bank credit growth accelerated, particularly in H2
Credit growth remained ahead of deposit growth

The RBI notes that the Reserve Bank’s balance sheet expanded during the year, while bank credit was relatively subdued in the first half because firms relied more on non-bank financing channels. Credit momentum strengthened as the year progressed and became broad-based, led particularly by services and retail sectors.

2. Reserve Money: What Is It?

Reserve money, also called high-powered money or base money, represents the monetary liabilities of the central bank.

According to the Annual Report, reserve money comprises:

currency in circulation;
bankers’ deposits with the Reserve Bank; and
other deposits with the Reserve Bank.

In simplified form:

Reserve Money = Currency in Circulation + Bankers’ Deposits with RBI + Other Deposits with RBI

It is the monetary base from which broader monetary aggregates are generated through the banking system.

The RBI explains that the Reserve Bank’s balance sheet also contains major non-monetary liability components such as risk buffers and revaluation accounts, while surplus liquidity placed by banks with the RBI through reverse repos/SDF is another major component.

3. RBI Balance Sheet Expanded in 2025-26

At end-March 2026, the Reserve Bank’s balance sheet stood at:

26.4% of GDP

This was higher than:

23.7% of GDP in 2024-25

The expansion was primarily driven by revaluation gains arising from higher gold prices and rupee depreciation.

This point becomes important later when studying the RBI’s balance sheet in detail.

Exam connection

Do not confuse:

RBI balance-sheet expansion
with
pure monetary expansion.

A portion of the balance-sheet increase reflected valuation changes, particularly in gold and foreign currency assets.

4. Reserve Money Growth: The Key Number

Adjusted for the first-round impact of changes in the CRR:

Reserve Money growth = 10.8% in 2025-26

compared with:

5.8% in 2024-25

Therefore:

RM growth accelerated significantly.

Why use “adjusted for CRR”?

Because a change in the Cash Reserve Ratio mechanically affects bankers’ deposits with the RBI and therefore can distort the measured growth of reserve money.

The RBI therefore presents an adjusted measure to better understand the underlying monetary expansion.

5. CRR Was Reduced by 100 Basis Points

The Cash Reserve Ratio was reduced by:

100 basis points

to:

3.0% of Net Demand and Time Liabilities (NDTL)

The reduction was implemented in four equal tranches of 25 basis points each, effective from:

September 6, 2025
October 4, 2025
November 1, 2025
November 29, 2025

Why does CRR matter?

When CRR is reduced:

Banks need to maintain a smaller proportion of NDTL as balances with RBI

↓

More funds become available with banks

↓

Potentially greater lending/liquidity capacity

This is why CRR changes have implications for both reserve money measurement and bank credit conditions.

6. Currency in Circulation Was the Main Component of Reserve Money

Currency in circulation (CiC) accounted for:

81.4% of Reserve Money

at end-March 2026.

CiC grew by:

11.4% in 2025-26

compared with:

5.8% in 2024-25

This is one of the most important numbers in the chapter.

7. Why Did Currency Demand Rise?

The increase in currency demand had several drivers.

The RBI identifies:

1. Welfare measures

Cash withdrawals increased in connection with welfare measures undertaken by several state governments, including:

compensation for crop damage;
direct benefit transfers.

2. Consumption demand

Cash withdrawals increased following:

GST rate cuts/rationalisation; and
income-tax rate cuts.

3. Lower interest rates

Easing interest rates contributed to increased demand for cash.

4. Precious-metal prices

Rising prices of precious metals also contributed to higher currency demand.

8. Does Rising Cash Use Mean Digital Payments Are Falling?

No.

This is an important conceptual point.

The Annual Report shows that currency demand and digital payments increased simultaneously.

Retail digital payments during 2025-26 grew:

15.1% in value terms

and:

26.9% in volume terms

Therefore, India’s payment landscape is not simply:

Digital payments ↑ → cash ↓

Instead, the evidence for 2025-26 shows:

Digital transactions ↑

while:

currency demand also remained elevated.

Exam takeaway

Digitalisation does not necessarily imply immediate or proportional demonetisation of cash usage.

9. Bankers’ Deposits with RBI Declined

Bankers’ deposits with the RBI accounted for:

15.8% of Reserve Money

These balances declined by:

18.2% during 2025-26

The major reason was the:

100-basis-point reduction in CRR.

This is exactly why the Annual Report distinguishes between headline reserve-money growth and reserve-money growth adjusted for the first-round CRR impact.

10. Sources of Reserve Money: NDA and NFA

On the asset side, reserve money is generated through:

Net Domestic Assets (NDA)

and

Net Foreign Assets (NFA)

of the Reserve Bank.

NDA broadly includes RBI’s net credit to:

banks;
government; and
commercial sector, mainly primary dealers.

NFA consists of:

gold; and
foreign currency assets.

11. NFA Expanded Strongly

During 2025-26:

RBI’s NFA increased by ₹8.2 lakh crore

The increase was driven by expansion in:

foreign currency assets; and
gold.

Although net sales to authorised dealers were higher than a year earlier, foreign currency assets increased because of revaluation gains.

The share of gold in NFA increased to:

17.2% at end-March 2026

from:

12.0% a year earlier

The main reason was revaluation gains arising from higher gold prices.

12. RBI’s Net Credit to Government Increased

The RBI’s net credit to the government expanded during 2025-26.

The report attributes this to liquidity injection through:

Purchase of Government Securities via Open Market Operations (OMOs)

This becomes important when studying the interaction between:

RBI liquidity management → G-sec purchases → RBI balance sheet → banking-system liquidity → monetary conditions.

13. Money Supply: M3

The broadest monetary aggregate discussed in this section is:

M3 — Broad Money

On the components side, M3 primarily consists of:

currency with the public; and
aggregate deposits of banks.

The Annual Report records:

M3 growth = 13.0% as on March 31, 2026

compared with:

9.4% a year earlier

Thus, broad money growth accelerated significantly.

14. Why Did M3 Grow?

The largest component of M3 is:

Aggregate Deposits

which accounted for:

86.6% of M3

The expansion in aggregate deposits was supported by sustained growth in time deposits.

Time-deposit growth:

10.6% in 2025-26

versus:

9.8% a year earlier

This occurred despite considerable moderation in interest rates.

15. Demand Deposits Remained Volatile

Demand deposits showed considerable volatility during the year.

The report notes that movements in demand deposits broadly mirrored variations in:

Currency with the Public

Currency with the public grew:

11.4% in 2025-26

versus:

5.9% in the previous year.

16. M3: Components vs Sources

This distinction is extremely important for RBI examinations.

Components of M3 — Liability side

Broadly:

Currency with the public + Aggregate deposits

Sources of M3 — Asset side

The expansion was mainly driven by:

Bank credit to the commercial sector

along with:

net bank credit to government; and
net foreign assets of the banking sector.

Exam Point

A question may ask:

“What was the major driver of M3 expansion from the sources side?”

Answer:

Bank credit to the commercial sector.

17. Bank Credit to the Commercial Sector

Bank credit to the commercial sector grew by:

15.7% in 2025-26

compared with:

10.8% in 2024-25

This made bank credit the largest contributor to M3 expansion from the sources side.

18. Net Bank Credit to Government

Net bank credit to government increased by:

9.1% in 2025-26

compared with:

10.5% in 2024-25

The increase was associated with RBI purchases of government securities.

The important distinction is:

Credit to commercial sector → stronger growth

while:

Net bank credit to government → 9.1% growth.

19. Excess SLR Holdings Declined

Scheduled commercial banks’ excess holdings of Statutory Liquidity Ratio securities declined to:

8.2% of NDTL at end-March 2026

from:

10.3% a year earlier.

The RBI notes that excess SLR holdings provide banks with:

collateral buffers for accessing funds under the Liquidity Adjustment Facility; and
an additional component relevant to the Liquidity Coverage Ratio.

20. Key Monetary Ratios

The Annual Report discusses several important monetary ratios.

These include:

currency-deposit ratio;
reserve-deposit ratio;
money multiplier; and
money velocity.

These ratios help explain how monetary aggregates behave relative to deposits, reserves and economic activity.

21. Currency-Deposit Ratio Declined

The currency-deposit ratio moderated from:

15.4% as on March 21, 2025

to:

14.9% as on March 31, 2026

The RBI attributes this, among other factors, to an increasing shift in public preference towards digital payment modes.

This produces an interesting combination:

Currency in circulation grew 11.4%

but:

Currency-deposit ratio declined to 14.9%.

The denominator — deposits — grew sufficiently relative to currency to lower the ratio.

22. Money Multiplier Improved

The money multiplier measures the relationship between broad money and reserve money.

The Annual Report records an increase in the money multiplier to:

6.1

as on March 31, 2026,

from:

5.7

a year earlier.

The improvement reflected moderation in:

currency-deposit ratio; and
reserve-deposit ratio.

Exam formula

Conceptually:

Money Multiplier = Broad Money / Reserve Money

Therefore, a higher multiplier indicates that a given monetary base is associated with a larger amount of broad money.

23. Money Velocity Declined

Transaction velocity of money is broadly:

Nominal GDP / M3

The Annual Report states that transaction velocity declined during 2025-26.

The RBI associates this with:

greater financial deepening; and
monetisation of the economy.

Exam distinction

Money multiplier ↑

while:

Money velocity ↓

during 2025-26.

Do not confuse the two.

24. Bank Credit: The Big Story

Bank credit growth remained in double digits throughout 2025-26.

The major drivers were:

Services + Retail

The RBI notes that public sector banks recorded higher credit growth than private sector banks for the second consecutive year, resulting in an increase in PSBs’ share in total credit.

This marks an important shift from the earlier period when private-sector banks had generally been the stronger credit-growth engine.

25. Non-Food Credit Growth Reached 15.9%

Scheduled commercial banks’ non-food credit growth stood at:

15.9% at end-March 2026

compared with:

10.9% in March 2025

This is one of the most important numbers in the entire Money and Credit chapter.

26. Sectoral Credit Growth: March 2026

The broad sectoral picture was:

Sector	Credit growth, March 2026
Non-food credit	15.9%
Agriculture & allied activities	15.7%
Industry	15.0%
Services	19.0%
Personal loans	16.2%

The key message:

Services recorded the highest broad sectoral credit growth at 19.0%.

27. Agriculture Credit Recovered Strongly

Agriculture and allied activities credit growth reached:

15.7% in March 2026

compared with:

10.4% in March 2025.

The growth accelerated particularly towards the end of the year.

This is significant because agricultural credit growth had been relatively subdued during the earlier months.

28. Industry Credit: A Major Recovery

Industrial credit growth increased to:

15.0% in March 2026

from:

8.2% in March 2025.

The acceleration was broad-based.

Industrial credit gained momentum from May 2025, supported particularly by stronger credit growth to MSMEs.

29. MSME Credit Was a Major Growth Engine

The RBI highlights stronger credit growth in:

Micro and Small Enterprises

Their credit growth reached:

33.1% in March 2026

The trajectory was particularly strong during the second half of the year.

Medium enterprises recorded:

21.7%

while large industries recorded:

8.9%

credit growth in March 2026.

Exam insight

The industrial-credit revival was therefore not simply a large-corporate phenomenon.

A major component was:

MSME credit expansion.

30. Important Industrial Sub-Sectors

By March 2026, strong credit growth was visible in:

Basic metals and metal products

19.4%

Chemicals and chemical products

14.9%

Textiles

8.9%

All engineering

32.2%

Food processing

14.0%

Infrastructure

9.5%

Among these, all engineering and basic metals and metal products recorded particularly strong growth.

31. Services Credit Was the Strongest Broad Sector

Services-sector credit growth reached:

19.0% in March 2026

compared with:

12.0% in March 2025.

Major contributors included:

trade;
commercial real estate; and
NBFCs.

32. Trade Credit

Credit to trade grew:

16.2% in March 2026

compared with:

15.6% a year earlier.

Although the annual rate did not rise dramatically, trade remained an important component of services-sector credit.

33. Commercial Real Estate Credit

Credit to commercial real estate recorded:

19.9% growth in March 2026

compared with:

13.7% in March 2025.

This reflects strong momentum in commercial real-estate financing during the year.

34. NBFC Credit Recovered Sharply

Credit to NBFCs initially remained weak.

But the Annual Report notes a:

Sharp resumption of credit to NBFCs from October 2025

By March 2026:

NBFC credit growth = 26.3%

compared with:

7.4% in March 2025.

This is a major number to remember.

The report also notes that the additional 25-percentage-point risk-weight increase on bank credit to NBFCs introduced in November 2023 was restored to its earlier position with effect from April 2025.

35. Personal Loans Remained a Major Driver

Personal-loan growth reached:

16.2% in March 2026

compared with:

11.7% in March 2025.

The RBI identifies personal loans as a major driver of overall non-food credit growth.

36. Housing Loans: The Largest Personal-Loan Component

Housing loans account for nearly half of personal loans.

Housing credit grew:

11.5% in March 2026

compared with:

10.7% in March 2025.

Housing therefore remained a stable contributor to retail credit.

37. Vehicle Loans

Vehicle-loan growth strengthened significantly.

By March 2026:

Vehicle loans grew 18.6%

compared with:

8.6% in March 2025.

This is consistent with the broader improvement in automobile demand described elsewhere in the Annual Report.

38. Loans Against Gold Jewellery

This category deserves special attention.

Loans against gold jewellery grew by:

123.1% in March 2026

compared with:

121.1% in March 2025.

The extremely high growth rate should be remembered as an objective-exam fact, even though the absolute size of this category is much smaller than broad housing or personal-loan portfolios.

39. Credit Cards Were Much More Moderate

Credit-card outstanding growth was:

3.5% in March 2026

compared with:

10.6% in March 2025.

This represents a substantial moderation.

Therefore, retail credit growth was not uniform across all personal-loan categories.

40. Consumer-Durable Loans Contracted

Consumer-durable credit remained weak.

In March 2026:

Consumer-durable loans contracted 5.3%

year-on-year.

This followed a contraction of:

1.0% in March 2025.

Thus, within personal loans:

Housing ↑
Vehicle loans ↑
Gold loans ↑ strongly
Credit cards → slower growth
Consumer-durable loans → contraction

41. Deposit Growth Lagged Credit Growth

This is arguably the most important structural issue in the chapter.

The Annual Report states:

SCB deposit growth broadly remained below credit growth during 2025-26.

Although deposit growth improved during the later months, the gap between deposits and credit persisted.

Consequently:

The incremental credit-deposit ratio remained elevated.

42. Why Is the Credit-Deposit Gap Important?

Banks primarily fund lending through deposits, but they can also access alternative sources.

If:

Credit growth > Deposit growth

for a prolonged period, banks may need to:

raise alternative funds;
issue certificates of deposit;
use market-based funding;
manage liquidity more actively.

The RBI specifically notes that banks relied on sizeable certificate-of-deposit issuances to bridge the funding gap.

43. Certificates of Deposit Became Important

Total certificate-of-deposit issuances during 2025-26 reached:

₹13.5 lakh crore

compared with:

₹11.9 lakh crore in 2024-25.

In Q4:2025-26 alone:

₹5.3 lakh crore

of CDs were issued,

compared with:

₹2.3 lakh crore in Q1.

Why?

Higher credit offtake created funding requirements for banks, making market-based short-term funding more important.

44. Alternative Financing Reduced Pressure on Banks

The credit-deposit issue should not be interpreted as meaning that the commercial sector lacked financing.

The Annual Report shows that the:

Total flow of financial resources to the commercial sector

increased to:

₹47.0 lakh crore in 2025-26

from:

₹36.2 lakh crore in 2024-25.

This was supported by:

bank credit; and
non-bank sources.

45. Non-Bank Financing Became More Important

The increase in non-bank financing was mainly driven by:

Corporate bond issuances

and:

Foreign Direct Investment (FDI)

The outstanding credit to the commercial sector grew by:

15.0%

while non-bank sources grew by:

13.3%

during 2025-26.

This demonstrates an increasingly diversified financial system.

46. Bank Deposits vs Mutual Funds

The Annual Report contains an interesting analytical box examining the relationship between:

bank time deposits;
debt mutual funds; and
equity mutual funds.

The analysis asks whether mutual funds and bank deposits act as:

Substitutes or complements

The findings are important:

Bank time deposits and debt mutual funds acted as complementary avenues.

This was observed under both:

surplus liquidity conditions; and
deficit liquidity conditions.

The report suggests that distinct investor segments and India’s bank-centric but evolving debt market may explain this complementarity.

47. What About Equity Mutual Funds?

The analysis found:

No statistically significant relationship between bank time deposits and equity mutual-fund flows.

This is different from the relationship observed between:

Bank time deposits ↔ Debt mutual funds

which was found to be complementary.

Exam Point

Do not generalise the result as:

“Mutual funds substitute for bank deposits.”

The Annual Report’s empirical finding is more nuanced.

48. Bank Time Deposits and Mutual Funds: Key Numbers

During 2020-21 to 2024-25, average growth was:

Bank time deposits: 10.7%

The Annual Report also notes that:

Debt mutual-fund AUM growth = 5.3%

and:

Equity mutual-fund AUM growth = 32.4%

as of March 31, 2026.

This provides evidence of the growing importance of market-linked savings avenues.

49. The Complete Money-and-Credit Transmission Chain

For examination purposes, remember the chapter through this sequence:

Step 1 — RBI Balance Sheet

Gold revaluation + rupee depreciation + liquidity operations

↓

Step 2 — Reserve Money

Adjusted RM growth = 10.8%

↓

Step 3 — Banking System

Deposits and bank credit expand

↓

Step 4 — Broad Money

M3 growth = 13.0%

↓

Step 5 — Credit

Commercial-sector bank credit = 15.7%

↓

Step 6 — Sectoral Lending

Services = 19.0%
Personal loans = 16.2%
Industry = 15.0%
Agriculture = 15.7%

↓

Step 7 — Funding Gap

Credit growth > deposit growth

↓

Step 8 — Alternative Funding

CDs + corporate bonds + FDI + other non-bank sources

This is the conceptual backbone of Part 5.

50. Most Important Numbers from Money and Credit

Indicator	2025-26 figure	Exam Priority
RBI balance sheet / GDP	26.4%	⭐⭐⭐
Adjusted Reserve Money growth	10.8%	⭐⭐⭐⭐⭐
CiC growth	11.4%	⭐⭐⭐⭐⭐
CiC share in RM	81.4%	⭐⭐⭐⭐
Bankers’ deposits with RBI share in RM	15.8%	⭐⭐⭐
Bankers’ deposits growth	-18.2%	⭐⭐⭐
CRR	3.0%	⭐⭐⭐⭐⭐
CRR reduction	100 bps	⭐⭐⭐⭐⭐
Retail digital payments growth — value	15.1%	⭐⭐⭐
Retail digital payments growth — volume	26.9%	⭐⭐⭐
NFA increase	₹8.2 lakh crore	⭐⭐⭐
Gold share in NFA	17.2%	⭐⭐⭐
M3 growth	13.0%	⭐⭐⭐⭐⭐
Aggregate deposits share in M3	86.6%	⭐⭐⭐⭐
Time-deposit growth	10.6%	⭐⭐⭐
Bank credit to commercial sector	15.7%	⭐⭐⭐⭐⭐
Net bank credit to government	9.1%	⭐⭐⭐
Excess SLR / NDTL	8.2%	⭐⭐⭐
Currency-deposit ratio	14.9%	⭐⭐⭐⭐
Money multiplier	6.1	⭐⭐⭐⭐⭐
Non-food credit growth	15.9%	⭐⭐⭐⭐⭐
Agriculture credit	15.7%	⭐⭐⭐⭐
Industry credit	15.0%	⭐⭐⭐⭐⭐
Services credit	19.0%	⭐⭐⭐⭐⭐
Personal-loan growth	16.2%	⭐⭐⭐⭐⭐
MSME micro & small credit	33.1%	⭐⭐⭐⭐⭐
Medium-enterprise credit	21.7%	⭐⭐⭐
Large-industry credit	8.9%	⭐⭐⭐
NBFC credit	26.3%	⭐⭐⭐⭐⭐
Housing credit	11.5%	⭐⭐⭐
Vehicle loans	18.6%	⭐⭐⭐⭐
Gold-jewellery loans	123.1%	⭐⭐⭐⭐⭐
Credit-card outstanding	3.5%	⭐⭐⭐
Consumer-durable credit	-5.3%	⭐⭐⭐
Total financial resources to commercial sector	₹47.0 lakh crore	⭐⭐⭐⭐⭐
CD issuances	₹13.5 lakh crore	⭐⭐⭐⭐
Non-bank financial-resource growth	13.3%	⭐⭐⭐

51. RBI Grade B / Promotion Exam: High-Priority Revision

If you have only 10 minutes to revise this chapter, memorise this chain:

RM

10.8%

CiC

11.4%

M3

13.0%

Bank credit to commercial sector

15.7%

Non-food credit

15.9%

Services

19.0%

Personal loans

16.2%

Industry

15.0%

Agriculture

15.7%

MSE credit

33.1%

NBFC credit

26.3%

Money multiplier

6.1

CRR

3.0%

Credit > deposits

Persistent wedge

This is the numerical spine of Part 5.

52. Likely Objective Questions

Q1. Reserve money adjusted for the first-round impact of CRR changes grew by how much in 2025-26?

Answer: 10.8%.

Q2. What was M3 growth at end-March 2026?

Answer: 13.0%.

Q3. Which was the largest constituent of M3?

Answer: Aggregate deposits, with an 86.6% share.

Q4. What was bank credit to the commercial sector growth?

Answer: 15.7%.

Q5. Which broad sector recorded the highest credit growth in March 2026?

Answer: Services — 19.0%.

Q6. What was non-food credit growth?

Answer: 15.9%.

Q7. What happened to the credit-deposit relationship?

Credit growth remained above deposit growth, creating a persistent wedge.

Q8. What was the money multiplier?

6.1, up from 5.7.

Q9. What happened to the currency-deposit ratio?

It declined from 15.4% to 14.9%.

Q10. What was the CRR after the reduction?

3.0% of NDTL.

53. Possible Descriptive Question

“Despite rapid growth in bank credit, deposit growth remained relatively subdued during 2025-26. Examine the implications.”

Ideal answer structure

Introduction

India witnessed strong credit expansion during 2025-26, with bank credit to the commercial sector growing 15.7%.

Body

Explain:

deposit growth lagged credit growth;
incremental credit-deposit ratio remained elevated;
banks used CDs to bridge funding gaps;
credit growth was broad-based;
services and retail led;
MSME credit supported industrial recovery;
NBFC credit recovered sharply;
alternative non-bank financing expanded;
total financial resources to commercial sector increased.

Conclusion

The episode indicates strong credit demand alongside a progressively diversified funding structure, but persistent credit-deposit gaps require careful liquidity and funding management.

54. Another Likely Descriptive Question

“Discuss the evolution of India’s monetary aggregates during 2025-26.”

A high-quality answer should include:

adjusted reserve money growth 10.8%;
CiC growth 11.4%;
M3 growth 13.0%;
aggregate deposits as major M3 component;
bank credit as major source-side driver;
money multiplier 6.1;
currency-deposit ratio 14.9%;
CRR reduction by 100 bps;
increasing digital payments despite elevated cash demand.

The strongest answers will not simply list figures. They will explain the mechanism connecting them.

55. What the RBI Is Really Saying

The deeper message of the RBI Annual Report FY 2025-26 is that India’s monetary and credit system entered a phase of stronger financial intermediation and credit demand.

Three things happened simultaneously:

1. Monetary aggregates strengthened

RM ↑ → M3 ↑

2. Credit demand strengthened

Bank credit ↑ sharply

3. Traditional deposit funding did not keep pace

Credit growth > deposit growth

This created a need for:

CDs + corporate bonds + FDI + other non-bank financing

At the same time, digitalisation continued, but cash demand remained strong.

That is a much more sophisticated interpretation than simply saying:

“Bank credit increased.”

Key Takeaways

Adjusted Reserve Money growth = 10.8% in 2025-26.
Currency in circulation grew 11.4%, with CiC accounting for 81.4% of RM.
CRR was reduced by 100 bps to 3.0% of NDTL in four tranches.
RBI’s balance sheet reached 26.4% of GDP at end-March 2026.
RBI’s NFA increased by ₹8.2 lakh crore, with gold’s share rising to 17.2%.
M3 grew 13.0%, up from 9.4%.
Aggregate deposits represented 86.6% of M3.
Bank credit to the commercial sector grew 15.7%.
Non-food credit grew 15.9%.
Services credit grew 19.0%, the strongest among broad sectors.
Personal-loan growth reached 16.2%.
MSME micro and small-enterprise credit grew 33.1%.
NBFC credit recovered sharply to 26.3%.
Housing loans grew 11.5%, while vehicle loans grew 18.6%.
Loans against gold jewellery grew an extraordinary 123.1%.
Credit growth remained above deposit growth, creating a persistent funding gap.
CD issuances rose to ₹13.5 lakh crore.
Total financial resources to the commercial sector rose to ₹47.0 lakh crore.
Non-bank financing expanded, driven particularly by corporate bonds and FDI.
Bank time deposits and debt mutual funds were found to be complementary, while no statistically significant relationship was found between bank time deposits and equity mutual-fund flows.

Final Revision Box

2025-26 Money & Credit = “10.8 → 13.0 → 15.7 → 15.9 → 19.0”

10.8% → Adjusted Reserve Money
13.0% → M3
15.7% → Bank credit to commercial sector
15.9% → Non-food credit
19.0% → Services credit

Then remember:

CRR = 3.0%
Money Multiplier = 6.1
CiC = 11.4% growth
MSME/Micro & Small = 33.1%
NBFC = 26.3%
Credit > Deposits

That numerical sequence should be firmly embedded before moving ahead.

Next Part — Part 6

RBI Annual Report FY 2025-26: Indian Financial Markets — Money Market, Government Securities and Corporate Bonds

The next article will examine how these monetary and credit conditions translated into India’s money market, G-sec market and corporate bond market, including WACR, policy corridor, liquidity conditions, T-bills, CDs, CPs, OMO purchases, G-sec yields, FPI debt investment, corporate bond spreads and market turnover.