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Informist, Wednesday, Apr. 8, 2026

MUMBAI - Following is a compilation of stories on the Reserve Bank of India's monetary policy that was detailed on Wednesday:

SPECIAL STORIES

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FOCUS: MPC GIVES BOND INVESTORS CONFIDENCE, NIPS RATE HIKE FEARS IN THE BUD

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The Reserve Bank of India's Monetary Policy Committee Wednesday effectively pushed back the market's fears of a repo rate hike in the next few months. RBI Governor Sanjay Malhotra's comments poured cold water on the fire, ensuring that even the most intrepid of traders could not aggressively bet on policy rates rising anytime soon. 

The six-member committee unanimously held the repo rate at 5.25% and retained the policy stance at 'neutral', in line with the consensus from economists. The commentary was measured and downplayed both growth and inflation concerns emanating from the war in West Asia, dealers said. The MPC pointed to strong economic activity till February and mitigating factors on inflation, including government measures. The panel said the initial supply shock caused by the disruption in supply chains could change to a demand shock in the medium term, effectively signalling an aversion to raise rates and potentially hurt growth.

Traders who were betting on a 25-basis-point rate hike as early as June pushed back those bets to December at the least, with CPI inflation seen climbing to 5.2% during Oct-Dec, according to the RBI's forecast. A section of the bond market had held onto bets that the MPC would signal tightening monetary conditions due to the surge in crude oil prices in March following the outbreak of war in West Asia. These fears had pushed up gilt yields to multi-year highs, but yields ebbed this week even before the two-week ceasefire was announced early Wednesday. 

"The policy was quite benign and balanced and that has given some direction on calming the market, which had already reacted to the news from West Asia," said Ashhish Vaidya, managing director and country treasurer at DBS Bank India. "The RBI has signalled a high bar to rate hikes while placing the risks in plain sight in their growth and inflation forecasts."

The MPC warned of upside risks from the CPI inflation forecast of 4.6% for 2026-27 (Apr-Mar), which several market participants see as conservative. The transmission of higher energy prices to the domestic market will eventually drive up inflation, with food inflation facing a double-whammy from higher input costs and an El Nino effect that could result in a weak southwest monsoon. Based on the central bank staff's latest estimate of a real rate of 1.4-1.9% – the nominal policy rate net of inflation – the repo rate should rise by at least 75 bps in FY27 to 6% to reflect a neutral rate.

Moreover, the bond market's joy on Wednesday was only half-driven by the MPC decision and may have had more to do with the collapse in crude oil prices after a ceasefire was announced by the US and Iran earlier in the day. Brent crude futures fell over 15% intraday and traded near $93-$95 per barrel during Indian market hours Wednesday. The 10-year benchmark 6.48%, 2035 gilt yield fell 15 bps to 6.90%, charting its best session since May 10, 2022. The yield on the more rate-sensitive 6.01%, 2030 bond plunged 30 bps to 6.40%, the most for a five-year bond in nearly five years. 

Still, RBI Governor Malhotra's comments in the post-policy press conference proved an additional tonic for the last leg down in yields, dealers said. He said real rates remain high currently, citing a 2% level that nets out February's CPI inflation from the policy rate, with too much uncertainty to consider the forecast for FY27 to calculate the real rate.

The governor also reiterated that interest rates in India could possibly stay low in the short-to-medium term despite the war due to India's resilient economy and a neutral monetary policy stance. Adding to the market's comfort was that even the worst-case inflation scenarios in most treasuries do not see average CPI inflation topping 6%, the upper end of the RBI's tolerance band, in FY27. 

"The Iran war will drive RBI's future trajectory. But it will be a wrong conclusion that a long Iran war necessarily means higher rates," Sandeep Yadav, head of fixed income at DSP Mutual Fund, said. "It could also mean lower growth, and thus lower rates. We believe it is too early to even talk about rate hikes."

CURVING BACK AROUND

The government bond yield curve has been "bear steepening" over the past month, a situation where short-term bond yields have shot up quicker than those on long-term gilts. The monetary policy has turned the situation on its head.

As the balloon of rate hike worries has been punctured, debt instruments maturing in up to five years will turn back into prized assets, dealers said. The RBI's promise Wednesday of ensuring ample liquidity is also seen keeping banks' funding costs low, making the spreads of short-term gilts over the 5.25% repo rate attractive. This is especially true for short-term debt instruments such as certificates of deposits and commercial papers, which DSP Mutual Fund favours to outperform short-term government securities. 

This will align well in helping absorb the government's borrowing programme of INR 8.20 trillion in the half-year ending September. The share of sub-7-year bonds in the government's borrowing has risen to 31.6% in Apr-Sept from 28% in Oct-Mar and less than 25% a year ago. The share of bonds maturing in over 30 years has shrunk to less than 25% in the current borrowing calendar from 29.4% in Oct-Mar and 35.0% in the calendar for the first half of FY26.

The 10-year gilt yield is seen traversing the 6.80-7.10% range over the next two months, lower than the two-year high of 7.13% it closed at on Thursday. The fiscal impact of the West Asia war will prevent gilt yields from falling as rapidly as overnight indexed swap rates, dealers said. The Centre has foregone annualised revenues of around INR 1.4 trillion from its excise duty cut on diesel and petrol and also plans an Emergency Credit Line Guarantee Scheme for micro-, small-, and medium-enterprises worth INR 2.5 trillion.

Meanwhile, long-term bonds will remain under supply pressure, with rate cuts out of the picture. While demand from banks, pension funds, and insurers is likely to increase year-on-year in FY27, the RBI's purchases of gilts are expected to fall well short of its Herculean deficit financing of nearly INR 9 trillion in gross purchases of central government bonds in FY26. This will keep the pressure on yields as the market absorbs a record INR 16.09 trillion borrowing programme for this fiscal.

"I'm not going to build my portfolio around a (rate) hike that may or may not come in six months and the RBI has erased any view of in the next three months," a senior treasury official at a large state-owned bank said. "In the meantime, questions about the fiscal side are still there, while investors look for carry in short-term bonds."

WARY OF OVEREXTENSION

At the end of the day, traders remain satisfied with the MPC outcome but are wary of buying into the central bank's commentary with macroeconomic risks persisting. Some bond dealers also indicated they would not have taken Wednesday's benign commentary at face value if not for the announcement of the ceasefire in the West Asia war earlier in the day.

Foreign investment into gilts is expected to be negligible in the face of the large supply as the yields offered by domestic bonds are not attractive compared to the high US Treasury yields, especially as the hedging cost for foreign investors has shot up now. At best, the rate-setting panel's equanimity should stem the bleeding, dealers said. FPI investment in fully accessible route bonds, which have no limits for foreign holdings, fell nearly INR 240 billion between Mar. 2 and Apr. 7 to INR 3.07 trillion, according to Clearing Corp. of India data.

"The MPC was well-worded in the face of the current geopolitical uncertainty and has been well received, especially by foreign investors worried the RBI would be in a hurry to act," said Shailendra Jhingan, treasury head at ICICI Bank Ltd. "At the same time, the market is always forward-looking and will be looking at potential rate hikes later in FY27, limiting the downside in gilt yields."

Even without the war that started in late February, traders had pencilled in a rate hike in mid-2027 as inflation was forecast to trend higher. Traders see enough of an acknowledgement from the MPC that the timeline for rate hikes has moved up. The panel's calm stance will keep bonds well bid, but investors are not worried about missing these levels for good amid persisting uncertainty.

Reported by Aaryan Khanna

Edited by Tanima Banerjee

RBI POLICY STORIES

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MPC HOLDS REPO RATE, STANCE; FLAGS ECON RISKS FROM IRAN WAR

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The Reserve Bank of India's Monetary Policy Committee Wednesday left the policy repo rate unchanged at 5.25% in a unanimous decision, Sanjay Malhotra, the central bank's governor, said. Malhotra said the war in West Asia poses risks to India's economy even as the fundamentals remain strong. The committee also retained its 'neutral' policy stance.

The rate-setting panel's decision was on expected lines. Most economists and market participants polled by Informist had expected the committee to hold the key interest rate and stance. The committee has lowered the repo rate by 125 bps in 2025, the most in a calendar year since 2019. 

"The MPC noted that the intensity and the duration of the conflict in West Asia and the resultant damage to the energy and other infrastructure add risk to the inflation and growth outlooks," the Monetary Policy Committee said in its resolution statement. "However, the fundamentals of the Indian economy are on a stronger footing, providing it with greater resilience to withstand shocks now than in the past." 

The committee felt it was prudent to "wait and watch" the changing circumstances and the evolving growth-inflation outlook, Malhotra said. It remains vigilant and is closely monitoring incoming information and assessing the balance of risks, he added. The neutral stance also gave the rate-setting panel the flexibility to "respond judiciously" to incoming information, the RBI governor said.

The RBI projected GDP growth in the current financial year at 6.9%, lower than the 7.6% estimated for FY26. The central bank sees CPI inflation averaging 4.6% in FY27, after falling to around 2% in FY26.

The US-Israel war on Iran, which started on Feb. 28, has lead to a surge in energy prices and disrupted global supplies. The US and Iran early Wednesday agreed to a two-week ceasefire. Iran has agreed to reopen the Strait of Hormuz, through which a large chunk of global crude oil passes, for two weeks.

"Going forward, elevated energy and other commodity prices, as also shocks to availability of inputs due to disruptions in the Strait of Hormuz are likely to impact growth in 2026-27," Malhotra said. "Turning to the inflation outlook, recent spikes in energy prices due to the conflict have emerged as a risk."

With the repo rate left unchanged at 5.25%, the Standing Deposit Facility remains at 5.00% and the Marginal Standing Facility and bank rate at 5.50%. Minutes of the MPC's April meeting will be published on Apr. 22. The next meeting of the MPC is scheduled for Jun. 3-5.  

Reported by Shubham Rana

Edited by Avishek Dutta

RBI POLICY: PROJECTS FY27 GDP GROWTH AT 6.9%, CUTS ESTIMATES FOR Q1, Q2

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The Reserve Bank of India Wednesday projected India's GDP growth in 2026–27 (Apr-Mar) at 6.9%. The central bank also cut its growth estimates for the June quarter to 6.8% from 6.9% and that for the September quarter to 6.7% from 7%. 

The RBI projected growth of 7% for the December quarter and 7.2% for the March quarter. But risks to the baseline projection are tilted to the downside with uncertainty remaining elevated due to the West Asia conflict, RBI Governor Sanjay Malhotra said, while giving the projections. "Further escalation and wider spread of the conflict, heightened volatility in global financial markets and weather-related events, however, weigh on the domestic growth outlook," he said. 

The central bank's FY27 growth projection is in line with the government's view of 6.8-7.2%, estimated in the Economic Survey for FY26. The Indian economy grew 7.6% in FY26.

The RBI's Monetary Policy Committee, which met Mon-Wed, unanimously decided to leave the policy repo rate unchanged at 5.25%. The panel also decided to retain the 'neutral' stance, as it would give the central bank flexibility to act judiciously going ahead, Malhotra said. 

Going forward, elevated energy and other commodity prices, as also shocks to availability of inputs due to disruptions in the Strait of Hormuz, are likely to impact growth in FY27, Malhotra said. After the war in West Asia started in February, the price of Brent crude had jumped as high as 62% to over $118 a barrel on Mar. 31. After hovering around $109 a barrel since then, crude prices cooled to $93 a barrel Wednesday, after the announcement of a ceasefire between Iran and the US late on Tuesday. 

The government has taken several measures targeted at supporting exports and protecting supply chains, which should help mitigate the adverse impact of the conflict, Malhotra said. "Growth impulses continue to be supported by robust private consumption and investment demand," he said.  

"The fundamentals of the Indian economy are on a stronger footing at the current juncture than in previous crisis episodes as well as relative to many other economies, providing it with greater resilience to withstand shocks," Malhotra said.

According to the governor, heightened volatility in global financial markets with its spillover on domestic financial conditions could also weigh on India's growth prospects. Externally, India's merchandise exports may suffer due to disruptions in key shipping routes and the concomitant rise in freight and insurance costs if the war in West Asia continues for a long time, Malhotra said.

"Further escalation of the conflict, its continuation over a wider geographical spread and uncertainty regarding the damage to the energy infrastructure, apart from weather-related events, pose downside risks to the domestic growth outlook," the governor said. 

Contrary to the exogenous risks, the central bank sees domestic demand supported by sustained momentum in the services sector and rising capacity utilisation in manufacturing. India may also see continued demand due to the persisting impact of goods and services tax reforms and healthy balance sheets of financial institutions and corporates, according to Malhotra. "In this milieu, the government's focus on scaling up domestic manufacturing in several strategic and frontier sectors announced in the Union Budget 2026-27 bodes well for India's ensuing growth trajectory," Malhotra said. 

He said macroeconomic indicators till February also showed continued momentum in the Indian economy. "The agricultural sector's prospects are supported by healthy reservoir levels," he said. "Business expectations remain optimistic, and leading indicators point towards continued resilience in manufacturing and services sectors." 

The governor also said private consumption is expected to be supported by discretionary spending in FY27, and rural demand will also remain robust. "It should gain further traction on the back of favourable agricultural conditions and a healthy labour market," he said.  

In his concluding remarks, the governor said global economic conditions and sentiment have soured after the outbreak of the West Asia conflict, "adversely" impacting the growth and inflation outlook for India. "...we shall remain vigilant of the evolving situation and put in place policies that prioritise the best interest of the economy."

Reported by Shweta

Edited by Avishek Dutta

PEGS FY27 CPI AT 4.6%, FLAGS RISKS TO INFLATION ARE ON UPSIDE

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The Reserve Bank of India Wednesday projected headline inflation to average 4.6% in 2026-27 (Apr-Mar) and after more than a year of risks to inflation being "evenly balanced", Governor Sanjay Malhotra said that risks to inflation forecasts are on the upside. The risks particularly emanate from the war in West Asia, Malhotra said, with energy prices and their second-order impact clouding the inflation trajectory. The central bank kept the inflation forecast for Apr-Jun unchanged at 4.0%. 

"The ongoing conflict has led to large volatility in international energy and other commodity prices, imparting considerable uncertainty to the near-term inflation outlook," Malhotra said in his monetary policy statement on Wednesday. "Headline inflation remains contained and below the target, but upside risks to the inflation outlook have increased, driven by increased energy price pressures and probable weather disturbances affecting food prices," he added. 

The central bank's view on inflation for FY27 is in line with economists' view, who now expect inflation to average 4.5-5% this year, 50 basis points higher than previously projected. The US-Israel war on Iran, which started on Feb. 28, has dented oil and gas supply due to attacks on oil refineries in the West Asia region and also because of the closing of the Strait of Hormuz. Supply of energy to India has also been disrupted as nearly 45% of India's crude oil imports and around 90% of LPG imports pass through the Strait.

According to an Informist Poll of 13 economists, CPI inflation is expected to have risen to 3.4% in March from 3.21% in February, as per the latest available data. The government revised the CPI series in February, updating the base year to 2024 and increasing the number of items whose prices are tracked. 

Taking into account the growth-inflation dynamics, the Monetary Policy Committee on Wednesday left the policy repo rate unchanged at 5.25% in a unanimous decision, while also retaining the "neutral" policy stance. "The MPC noted that the intensity and the duration of the conflict in West Asia and the resultant damage to the energy and other infrastructure add risk to the inflation and growth outlooks," Malhotra said. 

The quarterly break-up of the central bank's latest inflation forecasts is as follows – 4% for Apr-Jun, and 4.4% for Jul-Sept, 5.2% for Oct-Dec, and 4.7% for Jan-Mar. It had previously forecast inflation in the second quarter of FY27 to average 4.4%.

Malhotra also said that the central bank projects core inflation in FY27 to average 4.4%, and said that the central bank will give projections for core inflation hereon. "Core inflation pressures remain muted, although supply chain dislocations and the risk of second-round effects render the future inflation trajectory uncertain," he said. Core inflation--which excludes food and fuel items, whose prices can be volatile--is seen at 3.5% in March, up from 3.4% in February, according to economists' estimates. 

According to Malhotra, the West Asia war could impact India in several ways, beginning with elevated crude oil prices, increasing imported inflation and widening the current account deficit. Second, disruptions in energy markets, fertilisers and other commodities may adversely impact industry, agriculture and services, reducing domestic output. Third, heightened uncertainty, increased risk aversion, and safe haven demand could impact domestic liquidity conditions, economic activity, consumption and investment. Fourth, weaker global growth prospects may dampen external demand and reduce remittance flows. Finally, adverse spillovers from global financial markets could tighten domestic financial conditions and raise the cost of borrowing. "Overall, the initial supply shock can potentially transform into a demand shock over the medium term if the restoration of supply chains is delayed," the governor said. 

So far, there has been a severe shortage of liquefied petroleum gas domestically, India's primary cooking fuel. The government has taken a slew of measures to ensure its supply remains smooth for domestic use, including fixing a stringent quota for LPG used for industrial purposes. Oil marketing companies have also, so far, absorbed the ballooning crude oil prices, and have not increased pump prices of widely used fuels like petrol and diesel.

The government has also reduced excise duty on petrol and diesel by INR 10 per litre on Mar. 27 to INR 3 per litre and zero, respectively, to provide relief to oil companies. Lauding these steps, the governor said that these steps should mitigate the adverse impact of the conflict. He, however, noted that although retail prices of petrol and diesel have remained unchanged so far, the pass-through of higher global energy prices has resulted in some price increases in a few other fuel items. Prices have increased for select fuels such as premium petrol and LPG, and diesel for industrial use.

Since the war broke out, Brent crude oil prices jumped 52% to $100 per barrel on Tuesday, and have eased slightly to around $93 on Wednesday after the US and Iran agreed to a two-week ceasefire to negotiate a definitive agreement for peace between the warring parties and in West Asia.

Besides the impact of the West Asia war, the likely emergence of El Nino conditions could pose a risk to the inflation trajectory, the central bank said. Food price outlook, however, remains comfortable in the near term with robust rabi production, adequate reservoir levels and comfortable buffer stocks of foodgrains. 

Concluding his statement, Malhotra said that global economic conditions and sentiment have soured after the outbreak of the West Asia conflict, and that has "adversely impacted" the growth-inflation outlook. "As reiterated before, we shall remain vigilant of the evolving situation and put in place policies that prioritise the best interests of the economy." 

Reported by Priyasmita Dutta

Edited by Deepshikha Bhardwaj

NO NEED FOR REGULATORY ACTION ON HDFC BANK, SAYS MALHOTRA

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The Reserve Bank of India Governor Sanjay Malhotra Friday said the central bank doesn't see a need for regulatory action over the recent developments at HDFC Bank, reiterating that there are no material governance concerns at the country's largest private lender. 

HDFC Bank Chairman Atanu Chakraborty resigned on Mar. 18, saying certain practices at the bank were not in line with his "values and ethics", raising governance concerns. On Mar. 20, the bank appointed Keki Mistry as interim part-time chairman.

"We do not have any material concern, whether it is related to governance or conduct," Malhotra said at a post-policy press conference. "So I would like to repeat that here, that we have never seen any material in our supervision or by looking at their records, such a matter related to governance and conduct has not come in front of us." On Wednesday, the bank's shares ended 5.7% higher at INR 816.10 on the National Stock Exchange. 

Malhotra said such episodes at private banks are entity-specific and pose no systemic risks. "These are entity-specific developments, do not pose any systemic risk at this point in time, as we have clarified that as they play out, we deal with them on a bilateral basis and the banking system as a whole remains resilient."

RBI Deputy Governor Swaminathan J. said the central bank continues to focus on improving conduct and governance standards. "Banks run on very professional lines, and any material supervisory concerns, as and when it arises, are dealt with on an event-specific basis," Swaminathan said. "If anything requires a system-level, or a regulatory tweak... we are not averse to taking such measures, but at this point in time, there is no event that warrants a macro-prudential measure, or a regulatory tweak."   

Talking about bank credit, Malhotra said war in West Asia will not pose a significant risk to bank credit growth. "No, I don't see a significant risk. It has been growing, and in certain sectors, it is very small. Overall, I think, because especially retail, services, even agriculture, all sectors, MSMEs (micro, small, and medium enterprises), strong growth, we expect this growth to continue," he said. 

The governor also said that financial stability was the central bank's primary objective, followed by price stability and growth. The RBI governor said that monetary policy is not needed for financial stability, but theoretically, it's a tool for it. "... we are looking at the products market, securities markets, banks, NBFCs (non-banking financial companies), and monetary policy. We are alert, and financial stability is the first objective, followed by price stability and growth. We continue to do whatever is required in the best interest of the economy and ensure financial stability."

On India's macroeconomic stability, Malhotra said it will continue to be an attractive destination for capital. India's macroeconomic fundamentals are very strong for a number of reasons, including its policies, demographics, urbanisation, financial conditions, and stability, he said. "It is a matter of time that those people who want to make, those who are patient, those who want to make long-term money, they will certainly come to India,"  Malhotra said.

Reported by Vaishali Tyagi

Edited by Saji George Titus

TO REMOVE NEED FOR BANKS TO KEEP INVESTMENT FLUCTUATION RESERVE

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The Reserve Bank of India Wednesday proposed to dispense with the need for banks to maintain an Investment Fluctuation Reserve as an additional buffer to hedge against depreciation in the value of investments. "... in view of the developments in the prudential framework over the years, it is proposed to dispense with the requirement to maintain an Investment Fluctuation Reserve as an additional buffer to hedge against depreciation in the value of investments," RBI Governor Sanjay Malhotra said, announcing the April monetary policy statement.

"It (the removal) does not in any manner change the value at which the investment book has to be reflected in the accounting books, and also it does not change the profit calculation in any manner," RBI Deputy Governor Swaminathan Janakiraman said at a post-policy press conference. Removal of the buffer will normalise and simplify compliance with the existing norms across banks, he said. 

Under the current norms, commercial banks, excluding small finance banks, payment banks, and regional rural banks, maintain a capital charge for market risk and follow revised norms on classification, valuation, and operation of investment portfolios. In consideration of these applicable prudential requirements, it is proposed to dispense with the reserve requirement, the RBI said. 

The existing guidelines for other bank categories are also being revised to address operational challenges banks face in complying with the regulatory thresholds for the investment fluctuation reserve and to harmonise instructions, thereby enhancing regulatory clarity. The RBI will soon draft directions for public consultation.

Reported by Janwee Prajapati

Edited by Saji George Titus

MALHOTRA SAYS NOT MUCH SHOULD BE READ INTO HIGH OIS RATES

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 Reserve Bank of India Governor Sanjay Malhotra Wednesday dismissed any concerns arising from the recent rise of the overnight indexed swap rates. "OIS is a very thin market, not much should be read into it," Malhotra said during the post-monetary policy press conference here. 

The one-year swap rate has risen around 37 basis points since the military conflict began in West Asia on Feb. 28. On Apr. 2, the swap rate ended at 6.37%, the highest closing level since Jan. 23, 2025. The market was earlier expecting the central bank to raise key interest rates by 75-100 basis points in 2026-27 (Apr-Mar). However, after the US and Iran agreed to a two-week ceasefire late Tuesday and following the RBI governor's comments during the monetary policy announcement, the market now does not expect any rate hike till September.

Commenting on the high yields of government bonds, the RBI governor said the market determines their prices. "These prices are determined, whether it is the forex markets, whether it is the bond yields, etc, these are determined by the markets," Malhotra said after detailing the first bi-monthly monetary policy statement for FY27. "We have deep markets for the government bonds, some of the benchmark government bonds. And we let the markets determine their prices."

Asked about the low weighted average call rate and any likely announcement of any measures by the central bank to support rates by deploying a variable rate reverse repo auction, the governor said the RBI had consciously let the rate be at the lower end of the liquidity adjustment facility corridor. "When there is so much of an uncertainty, we want to give the comfort to the banks that liquidity will not be in deficit. And so, that's why we have allowed it (weighted average call rate) to be in the lower end," Malhotra said. "It's not outside the LAF. And it's only to give them the comfort. It is not any signal for a rate reduction or anything," he said.

The weighted average call rate remained near the RBI's Standing Deposit Facility rate of 5.00% in the past few sessions due to ample liquidity in the banking system. Since the last Monetary Policy Committee meeting in February, system liquidity stood at an average daily surplus of INR 2.3 trillion and the weighted average call rate traded in the lower half of the Liquidity Adjustment Facility corridor except towards the end of March. In fact, the liquidity surplus in the system was INR 4.02 trillion Tuesday, the highest since Aug. 2. 

The governor reiterated that the central bank will remain proactive and pre-emptive in managing liquidity conditions to ensure the financial system has adequate funds to support the needs of the economy. On Wednesday, the Monetary Policy Committee decided to keep the repo rate unchanged at 5.25%. Accordingly, the SDF rate remains 5.00%, while the marginal standing facility rate and bank rate remain 5.50%. The MPC also retained its neutral stance, allowing flexibility to respond to evolving conditions.

Reported by J. Navya Sruthi

Edited by Tanima Banerjee

MALHOTRA SAYS TO INTRODUCE NEW FRAMEWORK FOR NBFC CATEGORISATION

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The Reserve Bank of India will soon release a new framework for the categorisation of non-banking finance companies, Governor Sanjay Malhotra said Wednesday. "We are coming up with the next list of new frameworks for the NBFCs... for categorisation into upper, middle layer... very soon," Malhotra said at a post-policy press conference.

"Generally, we do a draft... this time we will take a call," he said.

Asked specifically about the categorisation of Tata Sons, the governor said he won't answer questions about specific lenders. In September, the Reserve Bank of India cancelled the certificates of registration of 34 non-banking financial companies, and Tata Sons was not among them. The regulator said it was reviewing the request to classify Tata Sons as an upper-layer NBFC company.

Reported by Meera Nair

Edited by Saji George Titus

INTEREST RATES MAY STAY LOW FOR LONG TIME DESPITE WAR – MALHOTRA

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Interest rates in India can possibly stay low in the short-to-medium term despite risks to the growth and inflation outlook from the war in West Asia, Reserve Bank of India Governor Sanjay Malhotra said Wednesday. A structurally strong and resilient Indian economy and a neutral monetary policy stance may allow interest rates to stay low, the governor said in a press conference. 

The RBI's Monetary Policy Committee Wednesday left the repo rate unchanged at 5.25% and maintained the neutral stance, in line with expectations. Malhotra flagged that the war in West Asia poses risks to India's growth and inflation but macroeconomic fundamentals remain strong. 

"We are in a neutral state," Malhotra said. "Possibility either way cannot be ruled out. It is quite possible that these low rates continue for a long time."

There is no pre-set course of action for monetary policy, Malhotra said. The rate-setting panel will look at various factors over a period of time to take a call on interest rates, he added. "Things are evolving so drastically and so frequently every day, so we have to be prepared. And so we will not be in a position to say what the MPC is going to do in the next meeting," Malhotra said, adding that it will take many months for the supply shock from the West Asia war to become a demand shock.

India's long-term macroeconomic fundamentals remain very strong and continue to drive growth and keep price pressures contained, Malhotra said. "So it's quite possible that even in the short to the medium term, we will continue to have low rates," the governor said. "It's quite possible."

The RBI has projected India's GDP to grow 6.9% in the current financial year. Malhotra said the growth estimate is not too optimistic even as the war in West Asia poses downside risks to growth. "If there is a prolonged disruption in the supplies, which we hope should normalise sooner than later, that can put pressure on the assessment of growth of 6.9%," Malhotra said. India's GDP growth is projected at 7.6% for FY26, according to the government's second advance estimate. 

Malhotra said real interest rates--rate of return over and above the expected rate of inflation in an economy--are still high. Real interest rates are around 2%, they are not low.

Reported by Shubham Rana

Edited by Vandana Hingorani

GOVERNOR HOPEFUL OF GOOD FPI FLOW IN DEBT, LESS OUTFLOW IN EQUITY

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Reserve Bank of India Governor Sanjay Malhotra Wednesday said he is hopeful of good inflows from foreign investors in the debt market in the financial year 2026-27 (Apr-Mar) and lower outflows from these investors from the equity market. India's fundamentals and demographics are strong and the country also offer macroeconomic stability, which will attract foreign capital, Malhotra told the post-monetary policy press conference.

Malhotra said it is "only a matter of time" till foreign portfolio investments and foreign direct investments come to India. He expects repatriation of foreign funds to slow down in FY27.

"Because of the policies, because of the demographics, because of the urbanisation, because of the financial conditions that are there, the stability that we offer, it's a matter of time that those people who want to make, those who are patient, those who want to make long-term money, they will certainly come to India," Malhotra said. He expects outflows from India's equity market to reduce in FY27 as valuations have turned attractive. There were outflows of foreign capital in FY26 due to higher valuations which have since corrected, Deputy Governor Poonam Gupta said.

Asked if there was concern about overseas remittances and the importance of remittances from West Asia, Gupta said remittances come from a diverse set of regions and the share of the Persian Gulf countries in this has declined over time. She said the central bank does not see any dent in overall remittances this year. Remittances from West Asia could even increase as the geopolitical crisis in the region may be resolved soon, she said.

"When I talk about the diversity, it's not just the geographical diversity, it's also the kind of skill pool we have across different countries," Gupta said. "We have relatively low-skilled, medium-skilled, and high-skilled migrant workers who send these remittances." Gupta added that exchange rates and high nominal GDP growth will "help with (corporate) earnings" and attract more foreign capital this year.

Malhotra said the free trade agreements already signed and those in the pipeline with major economies will help both the current account and capital account. "So capital account seems very robust," the governor said. "Current account seems to be quite manageable. So I'm not at all concerned with the BoP (balance of payments) position of our country... we do need to continue the good work that has been done on both the current account and on the capital account and that makes me confident that the BoP position should going forward improve."

Reported by Ashutosh Pati

Edited by Rajeev Pai

CBDC FUTURE OF PAYMENTS; IN NO HURRY TO LAUNCH IT, SAYS SANKAR

==============================================================

The Central Bank Digital Currency is the future of payments, but there is a right time to launch it, Reserve Bank of India Deputy Governor T. Rabi Sankar said Wednesday. The right time to launch the Central Bank Digital Currency depends on other countries being "ready" for it, as the biggest advantage of this currency is in cross-border transactions, Sankar said at a post-policy press conference. The RBI is in no hurry to launch the digital currency, he said.

"... So, if you quickly launch it and the other countries have not launched it, that is not the situation we want to be in," Sankar said. "Which is why we are gradually moving, getting the technology right, getting the use cases right, like many government direct payments are being used."

In 2022, the RBI launched two pilot projects for wholesale e-rupee and retail e-rupee. Over the years, the central bank has introduced new features and use cases for its digital currency. Sankar said that the central bank is developing the programmability of the digital currency as another payment instrument, which is its distinguishing feature.

The total number of digital currency users stands at 10 million. There have been 150 million transactions using the central bank digital currency with a total value of INR 340 billion, Sankar said.

Reported by Janwee Prajapati

Edited by Saji George Titus

AVG UNCLAIMED DEPOSIT REFUND BY BANKS INR 7.6 BLN/ MO SINCE SEPT

===============================================================

Banks have been paying, on average, INR 7.6 billion in unclaimed deposit refunds per month to customers since September, Reserve Bank of India Executive Director Indranil Bhattacharyya said Wednesday. Between April and September, the RBI paid an average of INR 1.8 billion in unclaimed deposit refunds per month, Bhattacharyya added.

The central bank is also paying INR 6 billion as an incentive to banks as they are doing aggressive tracing of the customers and returning the unclaimed amounts lying with the RBI in its Depositors Education Awareness Fund, Bhattacharyya said at the post-policy press conference.

Unclaimed deposit is the credit balance of a bank account that has not been operated for more than 10 years. The banks transfer the unclaimed deposits to the RBI's Depositor Education Awareness Fund on the last working day of the subsequent month. The central bank has been encouraging banks to pursue customers having inoperative accounts and refund their unclaimed amounts lying with the RBI's fund.

Reported by Shweta

Edited by Tanima Banerjee

RECENT FX MEASURES NOT PERMANENT, STRUCTURAL, SAYS MALHOTRA

============================================================

The recent regulatory measures by the Reserve Bank of India in the foreign exchange segment are not permanent and stuctural, RBI Governor Sanjay Malhotra said Wednesday, adding that the steps were taken owing to the noticeably heightened volatility in the market and build-up of positions. 

"In the last few weeks of March, there was heightened volatility in the forex market. We saw that positions were being built up leading to arbitrage positions between the non-deliberable forward market and delieverable market," he said at the post-policy press conference. "In normal times, these linkages are important for efficient price discovery and that's why it has been our endevour to broaden and widen and make the market more liquid. But when there is excessive volatility, building up of positions, which is only increasing volatility and perhaps not helping in efficient price discovery, such measures are taken."

The RBI recently tightened its control over banks' foreign exchange positions. On Mar. 27, the RBI directed banks to ensure that net open rupee positions in the onshore market do not exceed $100 ‌million at the end of each business day, latest by Friday. It further doubled down on its support for the rupee and issued more directions on Apr. 1, prohibiting banks from offering non-deliverable derivative contracts using the rupee to resident or non-resident clients, effective immediately. The central bank also said that companies couldn't rebook cancelled forward contracts.

The governor said that the central bank continues to stand committed long term to the development, broadening and deepening of the foreign exchange market and to the internationalisation of the rupee. "So, obviously these are not measures that are going to be there for forever," he said. Malhotra further said that it would not be fair to compare the latest foreign exchange measures to the central bank's past measures to contain rupee volatility. 

RBI Deputy Governor T. Rabi Sankar added that the measures were also taken due to artificial drying up of dollar supply in the currency market. "These measures have to be seen in the context of this event, this episode, which was leading to disruptive volatility. More importantly, it was leading to an artificial drying up of supply in the market, which was affecting prices," Sankar said. "Although the transcations were arbitrage transactions, they were affecting the local prices. Our objective of doing this was to cool that phase down."

In March, the rupee had come under extreme downward pressure, hitting a record low of 95.2200 a dollar, due to a surge in crude oil prices and strong foreign portfolio outflows following the US and Israel's attack on Iran on Feb. 28. However, following the central bank's measures, the rupee has recovered over 2.5% from its record low. 

The governor said that India has sufficient foreign exchange reserves, with no concerns on that front. Earlier in the day, while detailing the monetary policy decision, Malhotra said the RBI's exchange rate policy remains unchanged. "Specifically, intervention in the foreign exchange market is aimed at smoothening excessive and disruptive volatility without targeting any specific level or band for the exchange rate," he said.

The RBI would judiciously contain excessive or disruptive volatility to ensure that self-fulfilling expectations do not exacerbate currency movements beyond what is warranted by fundamentals, he said.

Edited by Avishek Dutta

MPC DECISION TAKES US-IRAN CEASEFIRE INTO ACCOUNT, SAYS MALHOTRA

=================================================================

The Monetary Policy Committee's decision takes into account the ceasefire between Iran and the US announced early Wednesday, Reserve Bank of India Governor Sanjay Malhotra said. The MPC, which met Mon-Wed, decided to leave the policy repo rate unchanged at 5.25% and retain the 'neutral' stance. 

The global situation is evolving "drastically" and "frequently"--like there was pleasant news at 0530 IST, Malhotra said, referring to the ceasefire. The RBI's MPC will take a call going ahead based on how the factors play out, Malhotra said at the post-policy press conference. "The ceasefire, to some extent, has been taken into account. The whole implications, we'll come to know."

Based on its assessment of the economy, the RBI Wednesday projected India's GDP to grow 6.9% in FY27 with CPI inflation at 4.6%. The RBI expects improvement in these estimates, if the ceasefire between the US and Iran continues, Malhotra said.

But as of now, the CPI inflation projection takes into account supply shock, Malhotra said. Supply shock has become a concern following the joint military attack on Iran by the US and Israel on Feb. 28. Since then, the threat of Iranian attack has effectively shut the Strait of Hormuz, disrupting the transit of around a fifth of the world's crude oil.

After the ceasefire, Iran has committed to opening the Strait of Hormuz. "But we are not aware how much damage has happened, or how long it will take to restore some facilities in the Gulf that were shut due to the conflict," Malhotra said.

The war has affected several Indian businesses, and the RBI is deliberating the measures it can roll out to help such sectors, Malhotra said. The RBI is considering whether steps to allow a 100% loan waiver would be needed, or whether a targeted waiver would be the better option, Malhotra said. Meanwhile, the RBI does not expect the war to impact the profitability of Indian banks, Malhotra said. 

Reported by Krity Ambey

Edited by Akul Nishant Akhoury

INFLATION VIEWS TAKE INTO ACCOUNT SUPPLY SHOCKS, SAYS MALHOTRA

===============================================================

The Reserve Bank of India has taken into account the impact of supply shocks emanating from the war in West Asia while projecting headline inflation at 4.6% for 2026-27 (Apr-Mar), Governor Sanjay Malhotra said Wednesday. While supply shocks currently pose risks to inflation, energy supply normalising going ahead will help keep inflation in check, he said at the post-policy press conference.

"The ongoing conflict has led to large volatility in international energy and other commodity prices, imparting considerable uncertainty to the near-term inflation outlook," Malhotra had said in his monetary policy statement earlier on Wednesday. "Headline inflation remains contained and below the target, but upside risks to the inflation outlook have increased, driven by increased energy price pressures and probable weather disturbances affecting food prices," he had said. 

The central bank's view on inflation for FY27 is in line with economists' view, who now expect inflation to average 4.5-5.0% this year, 50 basis points higher than previously projected. The US-Israel war on Iran, which started Feb. 28, has dented oil and gas supply due to attacks on oil refineries in the West Asia region and also because of the closing of the Strait of Hormuz. Supply of energy to India has also been disrupted as nearly 45% of India's crude oil imports and around 90% of LPG imports pass through the strait.

The central bank, a first, also projected core inflation in FY27 to average 4.4% and said that the RBI will give projections for core inflation hereon. According to Malhotra, the central bank gave core inflation projection Wednesday based on request from the markets. Core inflation excludes food and fuel items, whose prices can be volatile.

Since the war broke out, Brent crude oil prices jumped 52% to $100 per barrel on Tuesday and have eased slightly to around $93 on Wednesday after the US and Iran agreed to a two-week ceasefire to negotiate a definitive agreement for peace between the warring parties and in West Asia. 

The central bank governor said that the Monetary Policy Committee's focus continues to be on headline inflation, while giving importance to all components--that tend to be volatile. "Main focus is to keep inflation within the target," he said. The RBI targets inflation at 4%, with 2% tolerance band on either side.  

Reported by Priyasmita Dutta

Edited by Akul Nishant Akhoury

TO ALLOW NBFCS IN TERM MONEY MKT, RAISE BORROWING LIMIT FOR PDS

===============================================================

To improve monetary policy transmission between the overnight borrowing market and longer-term interest rates, the Reserve Bank of India plans to permit All India Financial Institutions and non-banking financial companies, including housing finance companies, to participate in the term money market, according to the central bank's statement on developmental and regulatory policies released Wednesday. The central bank also plans to increase borrowing limits for standalone primary dealerships in this market, it said. The revised directions will be issued separately.

Currently, only banks and standalone primary dealerships can participate in the term money market, subject to certain limits. The new measures aim to improve depth of participation and liquidity in this market, the statement said. As per the central bank's 2021 master direction on call, notice and term money markets--which was last revised in June 2023--term money refers to unsecured borrowing or lending of funds for tenures exceeding 14 days and up to one year. As per the same directions, the prudential limit for outstanding borrowing transactions in the term money market for a standalone primary dealership is 225% of its net owned fund as at the end of the previous financial year. 

Primary dealerships are active borrowers in the uncollateralised term money segment, and often do not find enough lenders, a concern that has been passed on to the central bank, dealers have said. Banks avoid unsecured lending for long periods, especially for tenures that cross a financial quarter-end due to risk management and compliance, traders at standalone primary dealerships have said.

Reported by Cassandra Carvalho

Edited by Avishek Dutta

TOP 10 ANNOUNCEMENTS BY GOVERNOR MALHOTRA AFTER MPC MEET

========================================================

Following are the top 10 announcements by Reserve Bank of India Governor Sanjay Malhotra on Wednesday in his address at the conclusion of the Monetary Policy Committee's first bi-monthly meeting for 2026-27 (Apr-Mar):

INTEREST RATES

The Reserve Bank of India's Monetary Policy Committee left the policy repo rate unchanged at 5.25% in a unanimous decision. 

POLICY STANCE

The Reserve Bank of India's Monetary Policy Committee continued with the 'neutral' policy stance.

GROWTH

The Reserve Bank of India projected its GDP growth for FY27 at 6.9%, with the June quarter growth at 6.8%, tad down from 6.9% earlier. The central bank projected GDP growth for the September quarter at 6.7%, down from 7.0% earlier. GDP growth for the December and the March quarter of FY27 is seen at 7% and 7.2%, respectively. 

INFLATION

The Reserve Bank of India projected its headline inflation for FY27 at 4.6% and left the June quarter estimate unchanged at 4.0%. The central bank projected headline inflation for the September quarter at 4.4%, up from 4.2% earlier. The headline inflation for the December and the March quarter of the current financial year is seen at 5.2% and 4.7%, respectively.

Elevated energy prices due to the military conflict in West Asia and the 62% chances of El Nino possibility during the southwest monsoon pose upside risks to inflation. Core inflation for FY27 is projected at 4.4% and by excluding precious metals, the inflation is even lower, indicating that underlying inflation pressures are expected to remain contained.    

LIQUIDITY

System liquidity, as measured by the net position under the Liquidity Adjustment Facility, stood at an average daily surplus of INR 2.3 trillion since the last MPC meet in February. Since the last MPC meeting, the weighted average call rate traded in the lower half of the Liquidity Adjustment Facility corridor expected towards the end of March. Rates on commercial papers and certificates of deposit have remained elevated. Yields on government bonds remained rangebound to slightly down in February but heightened global yields and crude prices kept yields on government bonds firm. 

Heightened uncertainty, increased risk aversion and safe haven demand could impact domestic liquidity conditions, economic activity, consumption and investment. Going ahead, the central bank will continue to be proactive and pre-emptive in liquidity management and ensure sufficient liquidity in the banking system to meet the productive requirements of the economy.

EXCHANGE RATE

Despite stronger macroeconomic fundamentals, the Indian rupee in FY26 depreciated more than the average in the previous years. The exchange rate policy remains unchanged and intervention in the foreign exchange market is aimed at smoothening excessive and disruptive volatility without targeting any specific level or band for the exchange rate. The central bank would judiciously contain excessive or disruptive volatility to ensure that self-fulfilling expectations do not exacerbate currency movements beyond what is warranted by fundamentals.

TRADE DEFICIT

Rising global uncertainties and elevated prices of key energy commodities pose some upside risks to India's current account deficit in FY27. The recent bilateral and regional trade agreements with major trading partners are expected to boost India's trade and investment opportunities, widen and diversify its trading partners and integrate India into global value chains.

FINANCIAL STABILITY

The system-level financial parameters related to capital adequacy, liquidity, asset quality and profitability of scheduled commercial banks remain healthy. Similarly, the system-level parameters of non-banking financial companies, too are sound, with adequate capital position and improved gross non-performing asset ratios. Credit from all sources grew at 14.3% on year, up from 11.7%. Bank credit growth maintained its upward trajectory, and remained broad-based.

EASE OF DOING BUSINESS

The Reserve Bank of India announced three measures proposed to promote ease of doing business. The central bank proposed to revise and rationalise the matters required to facilitate better utilisation of the bank board's time. The central bank completed the consolidation exercise of regulatory instructions. The RBI will facilitate ease of doing business for MSMEs with the requirement of due diligence while onboarding them on trade receivables discounting system platforms.

CAPITAL ADEQUACY

The Reserve Bank of India proposed to remove the condition regarding NPA provisioning for inclusion of quarterly profits in capital to risk-weighted assets ratio computation. The central bank, in view of the developments in the prudential framework over the years, is proposing to dispense with the requirement to maintain an investment fluctuation reserve as an additional buffer to hedge against depreciation in the value of investments.

Compiled by J. Navya Sruthi

Filed by Vandana Hingorani

FX RESERVES RISE TO $697.1 BLN AS OF APR 3, UP $9.04 BLN ON WEEK

================================================================

India's foreign exchange reserves were $697.1 billion as of Apr. 3, the Reserve Bank of India Governor Sanjay Malhotra said Wednesday. This was up $9.04 from $688.06 billion as of Mar. 27. 

The latest reserves are adequate to cover 11 months of imports and 91.1% of external debt, Malhotra said. While India's external sector indicators remain favourable, "elevated global geopolitical, trade and investment uncertainties" require continuous monitoring of the developments, the central bank governor said.

"India has sufficient foreign exchange reserves and it is not a matter of concern," Malhotra said during the press conference Wednesday after the Monetary Policy Committee meeting. "India has 11 months of import cover."

India remains an attractive destination for greenfield foreign direct investment projects, Malhotra said. The gross FDI in India showed strong growth, while the net FDI saw an improvement, the governor said. Foreign portfolio investment recorded net outflows of $16.5 billion in the financial year 2025-26 (Apr-Mar) and $5.4 billion in FY27 till Apr. 6. 

Reported by Nandini Sinha

Edited by Akul Nishant Akhoury

TO REVIEW INCLUSION OF QUARTERLY PROFIT NORMS IN CRAR CALCULATION

=================================================================

The Reserve Bank of India has proposed to review the guidelines on inclusion of quarterly profits in capital to risk-weighted assets ratio computation, the RBI said in its statement on developmental and regulatory policies. 

Under the current guidelines, commercial banks can include quarterly net profits in their capital to risk-weighted assets ratio calculation given that the incremental provisions--made for non-performing assets at the end of any of the four quarters of the previous financial year--have not deviated more than 25% of the average of the four quarters. 

The Reserve Bank of India has proposed to scrap this condition. The draft amendment directions in this regard will be issued for public comments shortly, the RBI said.

"It is proposed to remove the condition regarding NPA provisioning for inclusion of quarterly profits in CRAR computation," said Sanjay Malhotra, the central bank's governor. "The system-level financial parameters related to capital adequacy, liquidity, asset quality and profitability of banks continue to remain healthy." 

Reported by Vaishai Tyagi

Edited by Akul Nishant Akhoury

TO ENSURE LIQUIDITY REMAINS IN SURPLUS, ASSURES PROACTIVE MGMT

==============================================================

The Reserve Bank of India will remain proactive and pre-emptive in managing liquidity conditions to ensure the financial system has adequate funds to support the needs of the economy, Governor Sanjay Malhotra said after the Monetary Policy Committee's meeting on Mon-Wed.

Liquidity in the banking system has remained comfortable, with an average daily surplus of about INR 2.3 trillion since the last monetary policy meeting on Feb. 6, Malhotra said. The RBI, he said, would ensure sufficient liquidity is available to meet the productive requirements of the economy, indicating continued support for credit flow and financial stability.

The governor said that system-level parameters of banks and non-banking financial companies remain sound, while credit growth continues to show an upward and broad-based trend, supported by adequate liquidity conditions. 

Overall credit from all sources has risen 14.3% year-on-year, Malhotra said. The central bank proposed to ease certain on-boarding norms for micro, small, and medium enterprises to improve access to credit. Malhotra also said the central bank would dispense with the investment fluctuation reserve requirement for banks.  

On Wednesday, the Monetary Policy Committee decided to keep the repo rate unchanged at 5.25%. Accordingly, the standing deposit facility rate remains 5.00%, while the marginal standing facility rate and bank rate remain 5.50%. The MPC also retained its neutral stance, allowing flexibility to respond to evolving conditions. 

To manage short-term liquidity needs, the central bank conducted seven short-term variable rate repo auctions, infusing INR 3.6 trillion into the banking system between February and the end of the financial year 2025-26. It also injected INR 1.37 trillion through two 90-day VRR auctions on Jan. 30, providing durable liquidity support.

Alongside liquidity measures, the RBI said it has comprehensively reviewed existing banking regulations and will simplify and rationalise norms, including those related to banks' boards. It also plans to consolidate supervisory instructions into a smaller set to improve clarity. 

Reported by Shumaila Firoz 

Edited by Avishek Dutta

TO CONSOLIDATE SUPERVISORY INSTRUCTIONS, PRUNE LIST OF BOARD MATTERS

=====================================================================

The Reserve Bank of India Governor Sanjay Malhotra Wednesday said the central bank has completed consolidation of all its supervisory instructions for the banking sector and it would release a new revised list. The RBI will also revise and rationalise matters requiring the attention of a bank's board as this will help utilise such boards' time better, the governor said.

The central bank will dispense with the requirement of due diligence while onboarding micro, small, and medium enterprises on the Trade Receivables Discounting System platforms, Malhotra said.

All three measures were part of the changes announced by Malhotra to boost the ease-of-doing business. This follows the consolidation of over 9,000 regulatory instructions into 238 Master Directions. This was a part of his statement after the first bi-monthly meeting of the RBI's Monetary Policy Committee for the financial year 2026-27 (Apr-Mar). 

Reported by Suryash Kumar

Edited by Akul Nishant Akhoury

TO EASE SOME ONBOARDING NORMS TO TREDS FOR MSMES

================================================

The Reserve Bank of India proposed to do away with the requirement of due diligence of micro, small, and medium enterprises while onboarding them on trade receivables discounting system, Governor Malhotra Wednesday said while presenting the first bi-monthly monetary policy statement of 2026-27 (Apr-Mar). This was done to simplify the onboarding process of MSMEs in TReDS and was among the measures that the central bank announced to promote ease-of-doing business. 

A comprehensive review of other extant instructions has also been undertaken and draft directions will be issued shortly for public consultation, the RBI said. The MSMEs and their promoters or promoter groups should be 'fit and proper' to be eligible to operate as TReDS, as per the RBI's rules. RBI would assess the 'fit and proper' status of the applicants on the basis of their past record of sound credentials and integrity, financial soundness, and track record of at least five years in running their businesses.

TReDS is an electronic platform for facilitating the financing or discounting of trade receivables of MSMEs through multiple financiers. These receivables can be due from corporates, government departments, and public sector enterprises. The guidelines for TReDS were issued in 2014 through a concept paper by the central bank and was these were subsequently updated in 2018 and the scope of TReDS was further expanded in 2023 with the inclusion of insurance companies as the fourth participant. 

Reported by Gopika Balasubramanium

Edited by Akul Nishant Akhoury

EXCERPTS ON INFLATION FROM MPC'S STATEMENT

==========================================

Following are the excerpts on inflation from the statement issued by the Reserve Bank of India on Wednesday at the conclusion of the Monetary Policy Committee's first bi-monthly meeting for 2026-27 (Apr-Mar):

As per the new CPI series (2024=100), headline inflation increased to 3.2% in February from 2.7% in January. The uptick was primarily driven by unfavourable base effects even as the momentum remained muted. While food inflation increased in February, core (excluding food and fuel) inflation remained unchanged. Excluding precious metals, core inflation remained moderate at 2.1% in January and February, suggesting subdued underlying inflation pressures. 

The ongoing conflict has led to large volatility in international energy and other commodity prices imparting considerable uncertainty to the near-term inflation outlook. The pass-through of higher global energy prices has resulted in price increases in select fuels such as premium petrol and LPG and diesel for industrial use. On the other hand, the near-term food supply prospects have been boosted by robust rabi crop providing some comfort. Considering all these factors, CPI inflation for 2026-27 is projected to be at 4.6% with Apr-Jun at 4.0%; Jul-Sept at 4.4%; Oct-Dec at 5.2%; and Jan-Mar at 4.7%. Persistently elevated energy prices due to the West Asia conflict and possible El Nio conditions (which could have a negative impact on southwest monsoon) pose upside risks to inflation. Core inflation is projected at 4.4% for 2026-27 and, excluding precious metals, it is even lower indicating that underlying inflation pressures are expected to remain contained. 

Compiled by Cassandra Carvalho

Filed by Avishek Dutta

TO REVISE, RATIONALISE MATTERS RELATED TO BANKS' BOARDS

=======================================================

In an effort to enable the boards of banks to use their time effectively, the Reserve Bank of India has proposed to revise and rationalise matters related to the same, according to the central bank's statement on developmental and regulatory policies released Wednesday. Draft directions for public consultation in this regard will be issued shortly, it said.

"...to facilitate better utilisation of bank boards' time, after a comprehensive review of all our extant instructions, we propose to revise and rationalise the matters requiring its attention," RBI Governor Sanjay Malhotra said in his monetary policy statement Wednesday.

The RBI also mandated certain policies and matters to be placed before the boards for approval, review, or information. The RBI's Monetary Policy Committee Wednesday left the policy repo rate unchanged at 5.25% in an unanimous decision. 

Reported by Ashutosh Pati

Edited by Avishek Dutta

End

US$1 = INR 92.58

Compiled by Shaheed Shaikh

Filed by Ashish Shirke

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