RBI Reports Slower Growth in Reserve Money; Currency in Circulation Surges

India’s monetary indicators showed mixed trends at the close of 2025, according to the latest data released by the Reserve Bank of India (RBI). Reserve money, a key measure of liquidity in the economy, expanded 2.9% year-on-year as of December 31, 2025. This was notably slower than the 4.9% growth recorded in the same period last year, reflecting tighter monetary conditions.

On the other hand, currency in circulation surged, rising by ₹98.34 billion to reach ₹39.24 trillion outstanding. This represents a 10.2% annual growth, nearly double the pace of 5.9% seen a year ago. The sharp rise in currency usage highlights continued reliance on cash transactions despite digital payment adoption.

Economists suggest that while reserve money growth has moderated, the strong expansion in currency circulation indicates robust demand for liquidity in households and businesses, especially during the festive and year-end period.

Key Highlights

• Reserve money growth: 2.9% YoY vs 4.9% last year.
• Currency in circulation: Up ₹98.34 billion to ₹39.24 trillion.
• Annual growth in currency: 10.2% vs 5.9% last year.
• Implication: Slower reserve money growth but stronger cash demand.

Sources: RBI Bulletin, Reuters, Business Standard