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Informist, Friday, Jun. 6, 2025

MUMBAI – Following are the highlights of comments by Reserve Bank of India Governor Sanjay Malhotra and other top central bank officials to the media on Friday at the conclusion of the Monetary Policy Committee's second bi-monthly meeting for 2025-26 (Apr-Mar):

SANJAY MALHOTRA

* If we were to cut repo rates by 50 bps, why not now
* We had to cut the repo rate by 50 bps, so we did it at one go
* We had to cut CRR, we did it at one go
* Front loaded repo rate cut, CRR cut to provide certainty
* Accommodative stance was just an intent
* What we speak must reflect in our actions; action is important
* Changed stance to neutral according to current situation
* Current conditions warranted change of stance
* We have delivered on our promise of cutting rates decisively
* Neutral means next move depends on upcoming data

* Neutral stance means rate can go either way
* All six MPC members were unanimous on change of stance
* Will see how situation evolves in terms of liquidity
* Haven't thought where interbank call money rate should be
* If we don't do VRRR, call rate will stay at 5.25%
* Limited space for monetary policy action
* MPC continues to monitor incoming data
* Our FX policy is very clear; we do not target any level
* We don't target any price, band on exchange rates
* We let prices be determined by the market
* We let exchange rate get determined by market

* Will build FX reserves if there are opportunities
* Can build forex reserves if there are opportunities
* Not unduly worried about building FX reserves
* Broader message is inflation is under control
* Can say we won in fight against inflation
* Safe to assume we have won the war against inflation

* FY27 inflation seen at 4.5%
* Scope to boost growth further
* Need to provide certainity to markets
* Will continue to focus on price stability
* Monetary transmission has been faster going by past trends
* Seeing transmission on credit side as well
* Monetary policy transmission faster at shorter end of curve
* Monetary policy transmission normally takes 6-9 months
* It has been only four months since the first rate cut
* Need even faster policy transmission
* Front loaded rate cuts to allow faster policy transmission
* Expect positive impact of policy on growth
* Difficult to assess transmission of policy action to real econ
* Expect impact of policy on growth in second half of FY26
* Difficult to estimate exact impact of policy on growth
* Policy will be very very clear
* We mean whatever we are saying
* Past, present or future, a lot depends on data
* Stance doesn't mean immediate action in next policy
* Accommodative, tightening doesn't mean rate change at next meet
* CRR cut was to infuse liquidity, cut cost of funding
* See 3% CRR as sufficient
* CRR of 3% can perhaps suffice
* CRR at 3% can suffice, but future uncertain

* Need liquidity for faster transmission of policy action
* Additional liquidity will certainly increase flow of credit
* Monetary policy not a sufficient condition for flow of credit
* Difficult to say what will be  policy transmission timeframe
* Aspiration is to grow at 7-8%
* Want GDP to grow as fast as possible
* Regulations on gold loans were draft, not final
* New regulations will be after consultation, impact study
* There was nothing new in draft gold loan norms
* Draft gold loan norms reiterated existing rules
* Some regulated entities weren't following gold loan norms
* To release final gold loan norms by Mon
* Declaration of ownership will suffice for gold loans
* Don't need credit appraisal for gold loans up to INR 250,000
* Loan to value ratio will be 85% for small loans
* NBFCs, small banks were giving loans up to 88% of gold value
* New gold loan norms will make such loans safer
* Hope final gold loan norms will help us regulate sector well
* No change in near future in norms on FII investment in banks
* Common man trusts banks with his money, this is necessary
* Need trustworthy owners at banks
* Our policy is to customise rules as far as possible
* Will review norms for type I non-bank financial companies
* Have issued a regulation making framework
* Will regularly review regulations, directions
* Regulation framework to have public consultation, impact study
* "I believe in doing my work" on boosting growth
* On growth: Expect everyone else to do their bit
* On if govt should support growth: Everyone must do their bit
* Growth will depend on macro-economic factors
* Market forces will be able to push demand for credit
* Believe mkt forces will push prices based on demand for credit
* On IndusInd Bank: "Normally we do not comment on individual banks"
* On IndusInd Bank: Bank doing well on the whole
* IndusInd Bank has taken enough steps to improve accounting practices
* On IndusInd Bk: Episodes don't bother us if few and far between

* On IndusInd Bank: MD, CEO resigning should be good enough
* Law will take its course on IndusInd Bank fraud
* On IndusInd Bk: Won't fail in our duty if we have to step in
* Let us not be speculative on IndusInd Bank fraud
* CRR not only tool for monetary policy, liquidity
* We have enough tools to tackle global uncertainties
* CRR is not the only tool, there are enough tools

* Can manage liquidity with OMOs, swaps, VRRs
* We have sufficient tools
* We believe in action, not in only making statements
* Study will look into where liquidity should be maintained
* Refuses to answer query on ideal system liquidity level

* We want to consolidate what we have already put in pipeline
* No timeline on OK small banks conversion to universal banks
* No new development on crypto currency

* Transmission of rate changes cannot happen overnight
* Deposit rates are not linked to any external benchmark
* Deposit rates will change with a lag of 6-9 months
* COVID is not a matter of concern right now
* India-Pak conflict had limited impact on econ activity
* No timeline for liqudity management framework
* Want liquidity mgmt framework revision as soon as possible

SWAMINATHAN J.
* No systemic impact arising from IndusInd Bank issue
* On IndusInd Bk: Priority is customers don't face any loss
* On IndusInd Bank: Will keep monitoring banking system
* On IndusInd, issue should settle down very soon
* Saw shrinkage of MFI portfolio due to recaliberation

T. RABI SANKAR
* Typically, short end adjusts quicker to rate changes
* Don't target any gilt yield levels
* Market will find its own level on G-Sec yield curve
* On bond yields: Leave adjustments to the market
* To release liquidity mgmt framework post internal examination

End

Compiled by Vinod Bhovad

Filed by Vandana Hingorani

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