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Informist, Friday, Feb. 6, 2026

 

NEW DELHI - Following are the top 10 announcements by Reserve Bank of India Governor Sanjay Malhotra on Friday in his address at the conclusion of the Monetary Policy Committee's sixth bi-monthly meeting for 2025-26 (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 retained the 'neutral' policy stance even as external member Ram Singh was of the view that the stance be changed to accommodative from neutral.

 

GROWTH

The Reserve Bank of India raised its GDP growth projection for the June quarter of 2026-27 (Apr-Mar) to 6.9% from 6.7%, and that of the September quarter to 7% from 6.8%. The central bank deferred the estimate for FY27 to April, after the base year for GDP is revised in February. 

 

INFLATION

The Reserve Bank of India raised its headline inflation forecast for the current quarter ending March by 30 basis points to 3.2% and also hiked the projection for 2025-26 (Apr-Mar) by 10 basis points to 2.1% with Jan-Mar at 3.2%. CPI inflation for Apr-Jun and Jul-Sept are projected at 4.0% and 4.2%, respectively. Excluding precious metals, the underlying inflation pressures remain muted. The risks are evenly balanced. According to Governor Sanjay Malhotra, "Despite the anticipated momentum being muted, unfavourable base effects stemming from large decline in prices observed in Jan-Mar of last year will lead to an uptick in inflation in the corresponding quarer this year."

 

LIQUIDITY

System liquidity, as measured by the net position under the Liquidity Adjustment Facility, stood at an average daily surplus of INR 0.7 trillion since the last MPC met in December. In response to the cumulative 125 bps cut in the policy repo rate, the weighted average lending rate of scheduled commercial banks declined by 105 bps for fresh rupee loans during Feb-Dec 2025. On the deposit side, the weighted average domestic term deposit rate on fresh deposits declined by 95 bps, while that on outstanding deposits softened by 41 bps over the same period.

 

Going ahead, the central bank will remain proactive in liquidity management and ensure sufficient liquidity in the banking system to meet the productive requirements of the economy and to facilitate monetary policy transmission. Liquidity management would be pre-emptive with sufficient allowance for unanticipated fluctuations in government balances, changes in currency in circulation, forex intervention, etc.

 

EXTERNAL SECTOR

Despite heightened uncertainty, global trade remained relatively robust. India's merchandise exports, supported by trade diversification efforts, grew by 1.9% on year in Oct-Dec whereas merchandise imports grew by 7.9% on year during the same period resulting in a widening of the trade deficit. Robust services exports and healthy inward remittance receipts would keep India's current account deficit for the current year moderate and sustainable.

 

On the external financing side, India remains an attractive foreign direct investment destination for greenfield projects. Gross foreign direct investment to India increased at a robust pace during Apr-Nov. Net FDI also increased as repatriations declined, despite a rise in outward FDI.

 

Robust services exports and healthy inward remittance receipts would keep India's current account deficit for the current year moderate and sustainable. Moreover, India's proactive efforts in pursuing bilateral and regional trade agreements with major trading partners are expected to boost international trade and investment, diversify 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 continue to remain robust. Similarly, the system-level parameters of non-banking financial companies, too, are sound, with adequate capital position and improved asset quality. As per latest available data, credit from all sources grew at 13.8% on year, compared with 11.6% a year ago. Bank credit growth, too, recorded an uptick in recent months. This growth is supported by sustained lending to all sectors, particularly retail, services and micro, small, and medium enterprises. Large industries also recorded higher credit growth.

 

ADVANCING FINANCIAL INCLUSION AND FLOW OF CREDIT

In the financial inclusion space, the RBI has comprehensively reviewed the Lead Bank Scheme, Kisan Credit Card Scheme, and the Business Correspondent Model. The bank will issue draft revised guidelines with respect to them. A unified reporting portal will also be launched by the RBI for better management of Lead Bank Scheme data. The limit of INR 1 million for collateral-free loans to MSMEs is proposed to be increased to INR 2 million. To further promote financing to real estate sector, it is proposed to allow banks to lend to real estate investment trusts with certain prudential safeguards.

 

Several measures were announced for strengtheneing of urban co-operative banks. The measures include raising the financial limits on unsecured loans and loans to nominal members by urban co-operative banks. The RBI has also proposed to remove the tenor and moratorium related requirements on housing loans given by tier-III and tier-IV urban co-operative banks. To strengthen the managerial and technical capacity of the urban co-operative banks, the RBI shall launch Mission-SAKSHAM (Sahakari Bank Kshamta Nirman). The mission intends to train over 140,000 participants from urban co-operative banks.

 

PROMOTING EASE-OF-DOING BUSINESS FOR NBFCs

NBFCs having no public funds and customer interface, with asset size not exceeding INR 10 billion, are proposed to be exempted from the requirement of registration. Moreover, it is proposed to dispense with the requirement for certain NBFCs to obtain prior approval to open more than 1,000 branches.

 

DEEPENING FINANCIAL MARKETS

Coming to financial markets, the RBI had earlier issued revised draft regulations for external commercial borrowing. The regulations have been finalised and shall be notified shortly. The central bank propose to remove the limit of INR 2.5 trillion for investments under the Voluntary Retention Route. Investment through the VRR in each category of securities will be subject to the investment ceiling for the respective category under the General Route.

 

Furthermore, in pursuance of the announcement made in the Union Budget 2026-27, the RBI proposes to issue the regulatory framework for derivatives on corporate bond indices and total return swaps on corporate bonds. It is also proposed to issue draft revised guidelines for authorised dealer banks and stand-alone primary dealers allowing them more flexibility in undertaking foreign exchange transactions.

End

 

Compiled by Vaishali Tyagi

Filed by Akul Nishant Akhoury 

 

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