RBI remains “agile and proactive” in policy actions in an evolving global context: GUV Malhotra
“In view of the rapid development, especially on the global front, we are constantly monitoring and evaluating the economic outlook. We are as agile and proactive in policy actions as always,” he said at the 24th FIMMDA-PDAI annual meeting in Bali on Friday.
He said growth inflation balances have improved significantly, with a decisive improvement in title inflation expected to remain consistent with the 4% target for FY26.
However, global uncertainty and weather barriers pose risks to the inflation outlook.
“Even if we expect real GDP growth to drop by 6.5% in fiscal 26, India is still the fastest growing economy. However, it is much lower than what we are pursuing. We have lowered the buyback rate twice and provided enough liquidity,” he said.
The governor said in the Indian financial market that all markets, including FX, G-SEC, and money market, remain stable to a large extent. He noted that while the rupee was under some pressure a few months ago, it has achieved better shape since then and has recovered some lost ground. As capital outflows accelerate, the stock market has undergone significant corrections in most emerging markets. However, the government securities market has remained rocky throughout the year.
He said the total market lending of the central and state governments, totaling Rs 24.7 billion in fiscal 2024-25, was sailed.
The cost of central government borrowing fell by 28 basis points to 6.96% in FY25, from 7.24% in FY24. He added that the secondary market in G-SEC continues to remain profound and active, partly included in the global bond index in India.
Malhotra said in India that the market is developing within a regulated framework to adapt to changing regulatory philosophy and approaches.
He also stressed that the forex market is quite liquid, with narrow bids and that the market is becoming increasingly transparent.
In January 2020, banks were allowed to trade FX during the onshore market period. Although quantity is not important, banks are trading before and after the onshore market. However, such transactions are largely limited to the period before and after the domestic FX market, he noted.
“The transparency and transparency of Forex pricing for smaller and less mature customers continue to attract our attention. More can be done here, and more needs to be done. The difference in pricing for small and small customers in the FX market goes far beyond the rationality of operation,” he said.
The Reserve Bank recently announced that it will also provide access to FX retail through the Bharat Connect platform. In the first phase, a pilot is planned to facilitate individual purchases of dollars. Subsequently, its scope will be expanded based on the experience gained.
“We will also continue to see banking channels used for activities on unauthorized FX trading platforms. This calls on banks to raise greater vigilance and work harder to raise awareness among customers about the dangers of using such platforms,” he said.
The Reserve Bank has been regularly updating alert lists for unauthorized forex trading platforms and conducting publicity campaigns to educate users.
“Financial markets are in a transition between global and domestic headwinds, between unprecedented opportunities and growing public expectations,” Malhotra said.
He stressed that financial markets will play a crucial role as India takes its due position in the emerging global order.
He said financial markets will need to promote efficient and cost-effective funds to realize the country’s aspirations.
