Banking Monthly Current Affairs: December 2025

Banking & Finance - Monthly Current Affairs: December 2025

This document summarises the key banking and finance developments of December 2025 relevant for competitive examinations and banking aspirants. It covers Reserve Bank of India decisions, payment-system milestones, regulatory changes, major liquidity operations, fintech and bank product updates, and concise definitions of important terms.

1. Reserve Bank Of India (Rbi) - 5th Bi-monthly Monetary Policy (3-5 December 2025)

The Reserve Bank of India's Monetary Policy Committee (MPC) met from 3 to 5 December 2025. The meeting was chaired by Governor Sanjay Malhotra.

MPC members present:

• Dr. Nagesh Kumar
• Saugata Bhattacharya
• Prof. Ram Singh
• Dr. Poonam Gupta
• Indranil Bhattacharyya

Key decisions:

• The MPC unanimously reduced the policy repo rate under the Liquidity Adjustment Facility (LAF) to 5.25%.
• Standing Deposit Facility (SDF) rate: 5.00%
• Marginal Standing Facility (MSF) rate and Bank Rate: 5.50%
• The Committee decided to maintain a Neutral policy stance to retain flexibility for future actions depending on incoming data.
• Reasoning cited: sharp decline in inflation to multi-year lows and early signs of growth moderation, which create room for measured monetary easing to support activity.

RBI Policy Rates 

Growth, Inflation and External Sector Outlook

• RBI raised FY26 real GDP growth projection to 7.3%. Quarter-wise projections included Q3 FY26 at 7.0% and Q4 FY26 at 6.5%.
• RBI revised FY26 CPI inflation projection to 2.0%. The medium-term CPI target remains 4% ± 2%.
• Current Account Deficit (CAD) moderated to 1.3% of GDP in Q2 FY26; RBI expects CAD to remain below 2% of GDP supported by services exports and remittances.
• India's foreign exchange reserves were reported at approximately USD 686.2 billion (as of 28 November 2025), giving an import cover of over 11 months.

2. Rbi Liquidity Operations and Related Measures

Open Market Operations (OMO) and swaps:

• RBI announced OMO purchases totalling ₹1 trillion (₹1,00,000 crore) to inject durable liquidity and support monetary transmission.
• A three-year USD/INR buy-sell swap of USD 5 billion was announced to smooth external volatility and support the rupee.

Liquidity and customer protection initiatives:

• RBI announced a campaign to accelerate payout of unclaimed deposits (estimated at ₹67,000 crore as of June 2025).
• RBI launched a two-month grievance redressal campaign starting 1 January 2026 to resolve complaints pending for over one month with the RBI Ombudsman.

3. Regulatory and Market Infrastructure Developments

Interest rate derivatives and digital-payments infrastructure:

• Interest Rate Derivatives (IRD) Master Directions, 2025: resident and non-resident entities allowed to trade rupee interest-rate derivatives from 1 March 2026 (subject to specified conditions).
• Indian Digital Payments Infrastructure Company (IDPIC): RBI approved the setting up of IDPIC (promoted by SBI and Bank of Baroda) to curb digital payment fraud and strengthen payment security across public sector banks.
• RBI directed banks to provide trilingual banking services (Hindi, English and regional language) to improve customer accessibility.

RBI supervision and enforcement:

• RBI Ombudsman report (2024-25): recorded 13.34 lakh complaints (up 13.55%); 81.53% complaints were against banks; credit-card complaints rose 20.04%.
• Penalties were imposed on certain banks for regulatory non-compliance (for example, HDFC Bank and Jammu & Kashmir Bank received monetary penalties during the period).

4. Payments Systems and Digital Finance

December 2025 witnessed major milestones in real-time retail payments, central bank digital currency (CBDC) usage and international payment linkages.

UPI and Retail Payments:

Retail CBDC - e₹ (Retail Digital Rupee):

• Retail e₹ crossed 120 million transactions with cumulative value of around ₹28,000 crore and more than 8 million active users.
• Use-cases include government disbursements, merchant payments and integrations with fintech platforms; cross-border pilots and applications are under exploration.

Payment-ecosystem expansions:

• NPCI International signed an MoU with ACLEDA Bank (Cambodia) to enable QR-based cross-border payments between UPI and Cambodia's KHQR.
• NPCI Bharat BillPay - Banking Connect launched an interoperable net-banking interface enabling biometric authentication and real-time oversight.
• Payments Infrastructure Development Fund (PIDF) had enabled 5.45 crore digital payment touchpoints and issued 56.86 crore QR codes to 6.5 crore merchants, with emphasis on Tier-3 to Tier-6 areas.

Payment-aggregator and fintech licences:

• RBI granted final Payment Aggregator licence to Mswipe, allowing omnichannel and cross-border payment services.
• South Indian Bank launched the RuPay SIB Paytag, an NFC-enabled contactless sticker supporting tap-and-pay transactions up to ₹1 lakh (PIN required above ₹5,000).
• Wise introduced a multi-currency travel card in India.

5. Financial Inclusion, Deposits and Small-credit Initiatives

• Pradhan Mantri Jan Dhan Yojana (PMJDY): deposits reached about ₹2.75 lakh crore across approximately 56 crore accounts; 78% of accounts in rural/semi-urban areas and 50% held by women.
• PM SVANidhi was extended to March 2030 offering staged loans and a RuPay-UPI credit facility for street vendors.
• APY (Atal Pension Yojana) crossed 8.34 crore subscribers with around 48% female participation, strengthening old-age social security penetration.
• Credit Assessment Model (CAM) launched to accelerate MSME lending by leveraging verified digital data.

6. Banks, Systemically Important Banks and Conversions

• Domestic Systemically Important Banks (D-SIBs): SBI, HDFC Bank and ICICI Bank retained D-SIB status with capital surcharges of 0.80%, 0.40% and 0.20% respectively.
• Fino Payments Bank received in-principle approval from RBI to convert into a Small Finance Bank (SFB) - the first payments bank to obtain such approval.
• RBI approved appointments and senior leadership changes across banks (see RBI appointments and bank MD/CEO approvals during the period).

7. Insurance, Pensions and Asset-management

• PFRDA issued a master circular on investment guidelines for pension funds (NPS, APY), revising asset-mix limits to allow greater diversification: up to 65% in government securities, 25% in equities, 45% in corporate debt with options to invest in Gold/Silver ETFs, REITs and InvITs; short-term debt capped at 10%.
• Insurance sector: LIC launched new products including "Protection Plus" and "Bima Kavach" and entered bancassurance partnerships (for example with Yes Bank).
• The Insurance Amendment Bill and related regulatory changes have influenced the insurance market environment, including foreign direct investment policies.

8. Capital Markets, Market Conduct and Sebi

• SEBI launched the PaRRVA (Past Risk and Return Verification Agency) platform with NSE and CAREEdge to verify historical performance claims and prevent misleading disclosures.
• SEBI issued refined norms for merchant bankers and strengthened surveillance and disclosure frameworks.
• SEBI granted in-principle approval to infrastructure InvITs (for example Raajmarg Infra InvIT) under existing InvIT regulations.

9. Major Corporate, Investment and Bank-product News Affecting Finance

• Large corporate commitments and investments were announced during December 2025 that affect credit flow and investment sentiment: Amazon's long-term investment plans in India and Microsoft's AI and cloud investments were notable examples.
• Several banks launched new premium and co-branded cards: PNB's "Luxura" RuPay card, IDFC First Bank's FD-backed credit card, and IndusInd-Jio-bp co-branded fuel + lifestyle cards.
• MoUs linking government, banks and multinational firms were signed for payments, tourism, logistics and fintech cooperation to deepen capital flows and digital adoption.

10. Selected Mous and Inter-institutional Initiatives of Banking Relevance

• NPCI International - ACLEDA Bank (Cambodia): QR-based cross-border payments linkage agreed.
• IDRBT - IIIT Hyderabad: MoU for collaboration in banking technology, cybersecurity and digital finance education and research.
• Multiple MoUs were signed linking state and central agencies with private banks and international agencies to promote payments, financial inclusion and digital infrastructure.

11. Important Definitions and Points

• Repo Rate - The interest rate at which the RBI lends short-term funds to commercial banks against eligible government securities (LAF operations).
• Reverse Repo Rate - The rate at which the RBI borrows short-term funds from commercial banks to absorb excess liquidity.
• Open Market Operations (OMO) - The RBI's purchase and sale of government securities in the open market to adjust liquidity and influence interest rates.
• Standing Deposit Facility (SDF) - A facility under which the RBI pays interest on banks' fixed deposits maintained with the central bank; part of the RBI's interest rate corridor architecture.
• Marginal Standing Facility (MSF) - A window for scheduled commercial banks to borrow overnight funds from the RBI in exceptional circumstances at a penal rate.

12. Quick Revision - Key Facts

• RBI repo rate (Dec 2025): 5.25%.
• SDF: 5.00%; MSF & Bank Rate: 5.50%.
• RBI OMO purchases announced: ₹1 trillion.
• USD/INR buy-sell swap: USD 5 billion (3-year tenor).
• India's forex reserves: ~USD 686.2 billion (28 Nov 2025).
• UPI (Nov 2025): 19 billion transactions; worth ₹24.58 lakh crore.
• Retail e₹ usage: >120 million transactions; >8 million active users.
• PMJDY deposits: ~₹2.75 lakh crore across ~56 crore accounts.
• PFRDA revised investment framework permits higher G-Sec and equity allocations; short-term debt cap at 10%.
• D-SIBs retained: SBI, HDFC Bank, ICICI Bank (with prescribed surcharges).