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Informist, Saturday, Feb. 8, 2025

 

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--RBI Malhotra: Will use unified lending platform to improve ease of credit 
--CONTEXT: Sitharaman, RBI Malhotra brief media following post-Budget meet 

--Sitharaman: RBI-govt co-ordination important on inflation, growth
--RBI Malhotra: Will be alert, agile in providing liquidity 
--RBI Malhotra: Alert to all pressures on inflation 
--RBI Malhotra: Most of rupee depreciation driven by global uncertainties 
--RBI Malhotra: Hopeful lower global uncertainty will help control inflation 
--RBI Malhotra: Have number of instruments to manage liquidity 
--RBI Malhotra: No need to worry about liquidity conditions 
--RBI Malhotra: Considered rupee level of 87/$1 for FY26 projections

 

NEW DELHI – The Reserve Bank of India will use several instruments to provide sufficient liquidity to the banking system, Sanjay Malhotra, the central bank's governor, said on Saturday. "We have a number of instruments at our hands to control and manage liquidity, and we will use them. We need not be worried on that account," Malhotra said at a joint press conference with Finance Minister Nirmala Sitharaman after she met the central bank's board in the customary post-Budget meeting in New Delhi on Saturday.

 

Malhotra listed out the measures available with the central bank to manage liquidity, such as dollar/rupee buy/sell swaps, variable rate repos, and open market operations to buy government bonds. The RBI has bought government bonds worth INR 588.35 billion in January, and will buy another five bonds worth INR 200 billion on Thursday through an open market operation auction. The central bank has also held a dollar/rupee buy/sell swap auction, where it accepted bids worth $5.10 billion. 

 

"Going forward too, we will be very watchful, alert, and very nimble and agile in whatever are the requirements of the banking system to provide liquidity both transient as well as durable," the governor said.

When asked if the RBI is concerned about imported inflation at the moment because of the falling rupee, Malhotra said that "we are alert to all pressures on inflation". Any depreciation of the rupee that leads to inflation--5?preciation in the Indian rupee leads to about a rise of 30-35 basis points in inflation--that has been kept in mind, the governor said. "And we will be watchful on that account."

 

The rupee has depreciated 2.1% against the dollar in 2025 so far. Malhotra said that most of the depreciation in the rupee is driven by global uncertainties, especially from tariff announcements by US President Donald Trump. "Hopefully, that should settle down, and that will help us in the downward movement of inflation," Malhotra said. The RBI has considered a rupee level of 87/$1 for its FY26 projections, Malhotra said.

 

Inflation is expected to decline going ahead, with an Informist poll projecting it at 4.5% for January. The RBI has projected inflation at 4.2% for FY26 against the current year's forecast of 4.8%. 

 

At the press conference, Sitharaman said that co-ordination between the RBI and the government is important for both inflation and growth. She said that the RBI's decision to lower the repo rate by 25 bps to 6.25% on Friday will also help revive private sector investment in the country. On a question on improving access to credit, Malhotra said that the RBI will use the Unified Lending Interface to improve the ease of credit.  End

 

US$1 = INR 87.43

 

Reported by Shubham Rana

Edited by Deepshikha Bhardwaj

 

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