RBI News | 14 june | RBI’s New Liquidity Playbook: CRR to Be Used as a Strategic Tool, Not Just for Emergencies

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 14 June 2025 |CreditSamadhaan.com News Desk | RBI News 

In a bold shift that could reshape India’s monetary policy playbook, the Reserve Bank of India (RBI) is moving toward a dynamic, proactive approach to managing liquidity in the financial system—by making the Cash Reserve Ratio (CRR) a central tool, not a last resort.

This new stance marks a paradigm shift in the way the RBI tackles market liquidity, aiming for faster policy transmission and stronger financial stability. The implications for banks, borrowers, investors, and the broader economy are significant and far-reaching.

What’s Actually Changing with CRR?

The CRR—the percentage of a bank’s total deposits that must be held in reserve with the RBI—has traditionally been treated as a blunt instrument, used only during periods of crisis or economic overheating.

But now, the RBI is reshaping that mindset. Instead of using CRR reactively, the central bank plans to use it strategically and frequently, even in normal market conditions, to:

  • 🔹 Smoothen liquidity fluctuations

  • 🔹 Absorb excess capital inflows

  • 🔹 Improve policy rate transmission to the real economy

  • 🔹 Reduce dependency on Open Market Operations (OMOs)

This positions CRR as a frontline tool—like a dial, not a switch—for calibrating the flow of money through the system.

 The Big Move: A 100 Basis Point CRR Cut | RBI News

Just last week, the RBI made headlines by slashing the CRR from 4% to 3%, a 100 basis point cut that stunned markets and analysts alike. This is the lowest CRR level in recent history, and it unleashed ₹2.5 lakh crore (approx. $29.25 billion) into the banking system.

This aggressive liquidity infusion is designed to:

  • ✅ Lower borrowing costs for individuals and businesses

  • ✅ Stimulate credit growth, especially in MSMEs and housing

  • ✅ Enhance banks’ ability to lend, increasing liquidity in the hands of consumers

According to central bank insiders, this is just the beginning of a new, flexible liquidity strategy.

Inside RBI’s New Strategy | RBI News

In an exclusive Reuters report, a senior RBI official shared a rare glimpse into the central bank’s evolving thinking:

“CRR is now being looked at from a liquidity management perspective—not just as a panic button.”

This reflects a modern, nuanced understanding of liquidity dynamics—where traditional methods like OMOs and FX swaps are no longer sufficient on their own.

Key Highlights of the Strategy:

  • 🔄 CRR will now be adjusted more frequently, based on real-time liquidity assessments.

  • 💡 RBI will reduce reliance on OMOs and prefer direct, structural tools like CRR.

  • 📊 The central bank will use CRR tweaks alongside reverse repos and auctions to fine-tune short-term interest rates.

$100 Billion Already Pumped into the System |RBI News

Since December 2024, the RBI has injected nearly $100 billion into the banking system through a mix of:

  • 🔁 Open Market Operations

  • 💱 Foreign exchange (FX) swaps

  • 🧰 Term repos and standing facilities

But with this new shift, CRR adjustments are expected to become the go-to mechanism—offering quicker, more targeted liquidity solutions.

RBI Eyes Stability in Interest Rates

Maintaining the overnight call rate—the rate at which banks lend to one another—close to the repo rate (currently at 6.5%) is central to RBI’s strategy.

To do this, the RBI will:

  • 🌀 Conduct variable-rate reverse repo auctions to mop up excess funds

  • 🧭 Recalibrate policy tools if the market rate drifts too far from the target

  • 📉 Maintain stability across the short-end of the yield curve

Already, the weighted average call rate has dropped closer to the 6.5% benchmark—signaling early success of this approach.

The Bond Market Reacts

Not all reactions have been positive. The increased reliance on CRR has reduced the need for OMOs, making long-term government bonds less attractive.

As a result:

  • 🔻 10-year bond yields have dipped, reflecting lower bond demand

  • 📉 Investors are repositioning portfolios away from long-dated securities

This will require the RBI to carefully balance liquidity goals with market stability, especially as fiscal borrowing remains high.

A New Liquidity Framework in the Works

RBI is currently finalizing a revised liquidity management framework that will:

  • 📌 Make CRR a more flexible and agile tool

  • 📌 Limit overuse of OMOs and FX swaps

  • 📌 Ensure tighter linkage between repo rate and market interest rates

  • 📌 Improve monetary policy transmission from the RBI to retail lending

Until this framework is formally launched, the central bank has assured continuity in current operations, including short-term liquidity injections as needed.

What This Means for You

Whether you’re a banker, borrower, or investor, this policy evolution carries direct consequences:

For Banks:

  • ✔️ More operational flexibility

  • ✔️ Increased loan disbursal capacity

  • ✔️ Potential for higher net interest margins

For Borrowers:

  • 💰 Potential drop in interest rates for home, auto, and business loans

  • 🚀 Easier credit access—especially for MSMEs and retail consumers

For Investors:

  • ⚠️ Stay alert to changing bond yield trends

  • 🧮 Expect rebalancing in fixed income portfolios

For the Indian Economy:

  • 🌐 A more adaptive monetary regime

  • 🔧 Faster response to liquidity needs

  • 🧩 Better alignment between market rates and policy objectives

Final Word: A More Intelligent RBI

The Reserve Bank of India is entering a new era of liquidity management—an era where flexibility, precision, and foresight take center stage. The transformation of CRR from a “break-glass-in-emergency” tool to a scalpel for managing liquidity signals a deeper evolution in how India handles macroeconomic challenges.

This is not just monetary policy—it’s monetary strategy.

And it’s built to keep India’s financial system stable, dynamic, and growth-ready.

RBI news today June 13, 2025 | The RBI is focused on digital equity. NITI Aayog is pushing for gender equity

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June 13, 2025 | RBI news today

In a significant development on June 13, 2025, two transformative initiatives have emerged at the national level — one economic, and the other social. The Reserve Bank of India (RBI) has unveiled a new directive aimed at enhancing digital banking in rural areas through low-bandwidth solutions. Simultaneously, NITI Aayog, in collaboration with the Ministry of Women and Child Development, has launched a district-wise gender equality audit to address India’s declining performance on global gender indices.

RBI News Today: Banking for Bharat Goes Digital

In a bold push for financial inclusion, the RBI has asked banks and fintech companies to develop digital banking products specifically designed for feature phones and low-data connectivity areas. This move is expected to bring millions of unbanked and underbanked rural Indians into the formal financial ecosystem.

With internet infrastructure still patchy in many parts of India, especially in tier-3 towns and villages, the RBI’s focus on low-bandwidth banking is both timely and essential. These lightweight platforms will work on 2G networks and basic devices, ensuring that digital banking is not just a privilege of the urban elite, but a right accessible to every citizen.

Additionally, the RBI has mandated that all such digital solutions must come with robust cybersecurity features, ensuring safe and secure banking experiences even for first-time digital users.

Driving the Financial Inclusion Index (FI-Index)

This development is closely tied to the RBI’s ongoing efforts to improve the Financial Inclusion Index (FI-Index), which measures access to banking, insurance, credit, and pension services across India. As of March 2024, the FI-Index stood at 64.2, a decent figure but still short of the national goal. With this new initiative, the RBI aims to push the score significantly higher by FY2026, thereby creating a more inclusive and digitally empowered economy.

NITI Aayog’s Gender Equality Mission: SDG 5 in Focus

While the RBI addresses economic inclusivity, NITI Aayog is turning the spotlight on gender equity. In collaboration with the Ministry of Women and Child Development, NITI Aayog has launched a district-level audit of India’s performance on Sustainable Development Goal 5 (SDG 5) — Gender Equality and Women’s Empowerment.

This initiative follows India’s slip in the World Economic Forum’s Global Gender Gap Report 2025, where the country dropped two spots to rank 131 out of 148 countries, with a concerning gender parity score of 64.1. The report cites stagnation in women’s participation in the workforce, political leadership, and access to healthcare and education as key reasons for the decline.

SDG 5: What It Measures

Sustainable Development Goal 5 includes six core indicators that reflect a nation’s commitment to gender equality:

  1. Ending all forms of discrimination against women and girls.

  2. Eliminating violence in public and private spheres, including trafficking and sexual exploitation.

  3. Eradicating harmful practices such as child marriage and female genital mutilation.

  4. Recognizing unpaid care and domestic work, and promoting shared responsibility.

  5. Ensuring universal access to reproductive health and rights.

  6. Enhancing women’s full participation and equal opportunities in political, economic, and public life.

India’s Performance: The Stark Reality

India’s national SDG India Index score for Goal 5 has stagnated at 48 since 2020-21, showing little to no improvement over the years. In the UN SDG Report 2024, India ranked 109 out of 166 countries, indicating a slow pace in meeting gender-related development targets.

NITI Aayog’s latest analysis reveals that 13 states and one union territory are performing below the national average in terms of gender equality. These include:

  • Odisha

  • Assam

  • Jharkhand

  • Bihar

  • Uttar Pradesh

  • Telangana

  • West Bengal

  • Haryana

  • Punjab

  • Madhya Pradesh

  • Tripura

  • Manipur

  • Chandigarh

These states are now under close observation, and targeted interventions will be planned based on district-level data.

Why These Developments Matter

Taken together, the RBI’s push for digital inclusion and NITI Aayog’s gender audit represent a holistic shift in India’s development strategy. While one addresses economic accessibility, the other tackles deep-rooted social inequities that have long held India back on global benchmarks.

  • The RBI is championing digital equity, enabling rural populations to access banking, credit, and government services without needing smartphones or broadband.

  • NITI Aayog is driving gender equity, making sure no woman or girl is left behind in India’s progress story.

Towards a More Inclusive India | RBI news today 

These moves are not isolated. They reflect a broader national vision of creating an inclusive, connected, and empowered Bharat, where both economic access and social justice walk hand in hand.

As India marches toward its 2030 SDG goals and prepares to become a $5 trillion economy, such grassroots-level initiatives will play a critical role in bridging both the digital and gender divides.

RBI Champions Financial Inclusion with Low-Bandwidth Apps for Feature Phones

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June 13, 2025 — In a decisive push toward its mission of 100% financial inclusion, the Reserve Bank of India (RBI) has called on banks and financial institutions to develop low-bandwidth digital apps and products specifically designed for feature phones. The move is aimed at unlocking access to financial services in India’s most remote and underserved regions, where smartphone penetration and internet connectivity remain challenges.

As part of this digital transformation drive, the RBI has also emphasized the integration of robust cybersecurity features to prevent online fraud and ensure safe banking experiences for all users.

Bridging the Digital Divide

While retail banking is largely available via smartphone apps, the RBI has noted a significant service gap for users of basic mobile phones. The central bank is now urging the industry to reimagine mobile banking for low-bandwidth environments, ensuring even users in low-connectivity zones can benefit from digital banking.

 “Design digital products that cater to the real India,” is the message from RBI to banks, encouraging user-centric innovation for feature phone users. This includes adaptable apps and products with simpler interfaces, low data needs, and offline capabilities.

Financial Inclusion on the Rise

Under the leadership of RBI Governor Sanjay Malhotra, the country’s Financial Inclusion Index (FI-Index) has already shown improvement—from 60.1 in March 2023 to 64.2 in March 2024, reflecting growing accessibility and usage of financial services. The RBI has set its sights on an even more robust score for FY26.

Surveying the Road Ahead

To further inform its policy moves, the RBI announced plans to conduct a nationwide survey on digital payment usage. The goal: to gain deep insights into transaction behavior, challenges faced by users, and areas needing innovation. This data will help shape strategies to enhance both inclusion and payment system efficiency.

Custom Solutions for Real Needs

RBI Deputy Governor M. Rajeshwar Rao highlighted the need for flexible, context-aware products—like seasonal savings schemes, variable repayments, and locally adapted services. These customer-first offerings, he said, would ensure that India’s diverse population receives tailored solutions that meet their financial realities.

The RBI is not just building apps—it’s building bridges. With this bold initiative, India moves one step closer to a future where no citizen is left behind in the digital financial revolution.