RBI MPC: Governor Sanjay Malhotra’s Key Quotes And Policy Signals

While keeping the repo rate unchanged at 5.25%, the Governor highlighted strong transmission of past cuts, a revised growth outlook, an evolving inflation path, and multiple regulatory and consumer protection measures aimed at strengthening financial stability and market efficiency.

RBI Governor Sanjay Malhotra opened the policy address by stating that India’s economy is “in a good spot”, even as global uncertainties remain elevated. He said underlying data continues to point to strong momentum, adding that growth looks “durable” and likely to be sustained in the coming period.

On rates, Malhotra said the Monetary Policy Committee was comfortable maintaining the status quo. He said the current policy rate is appropriate given prevailing macroeconomic conditions, reiterating that the stance remains neutral and future actions will be guided by evolving data.

Addressing growth projections, the Governor said real GDP growth for FY26 has been revised upward to 7.4. He added that real gross value added growth is estimated at 7.3, driven largely by services, while manufacturing activity is showing signs of revival. Urban consumption, he said, is also expected to strengthen further.

On inflation, Malhotra said headline CPI is projected at 2.1 for FY26, with inflation expected to normalise in the first half of FY27. He said CPI is seen at 4.0 in Q1 FY27 and 4.2 in Q2 FY27, adding that core inflation, excluding precious metals, is expected to remain range-bound. Full FY27 inflation projections, he said, will be presented at the April policy meeting after the new CPI series is released.

Liquidity management featured prominently in the Governor’s remarks. He said the RBI’s responsibility is to ensure sufficient system liquidity to meet the productive needs of the economy and support smoother transmission. Malhotra described transmission so far as “excellent”, noting that against cumulative rate cuts of 125 basis points, bank lending rates have fallen by over 100 basis points. He said the RBI will continue to provide liquidity pre-emptively, using tools such as variable rate repos and open market operations, with the immediate objective of keeping overnight rates aligned with the repo rate.

On government borrowing and bond markets, Malhotra downplayed concerns around supply pressures. He said the borrowing programme is manageable and urged markets to focus on net borrowing rather than gross figures. He added that higher issuance of Treasury Bills can help authorities manage the yield curve more efficiently.
The Governor also highlighted India’s external buffers, stating that foreign exchange reserves stood at $723.8 billion as of January 30, providing coverage of around 11 months of requirements. He said exports have seen an uptick and India continues to attract greenfield foreign direct investment despite global uncertainty.

On consumer protection, Malhotra announced that the RBI will introduce a framework to compensate customers up to ₹25,000 for losses arising from small-value digital frauds. He said a discussion paper will also be issued to strengthen digital payment safety, including possible additional authentication measures for select users.
Speaking on credit and inclusion, the Governor said the RBI proposes to raise the collateral-free loan limit for MSMEs to ₹20 lakh. He also announced fresh guidelines for Kisan Credit Cards and a unified reporting portal for the Lead Bank Scheme to improve coordination and monitoring.

On regulatory easing, Malhotra said certain NBFCs with no public funds and no customer interface may be exempted from registration requirements. He also announced the removal of the ₹2.5 lakh crore cap under the Voluntary Retention Route, and said revised external commercial borrowing regulations have been finalised and will be notified shortly.

Overall, Malhotra’s message was clear. The RBI is comfortable with the current growth-inflation balance, sees strong transmission of past actions, and remains ready to act on liquidity and regulation to support stability, efficiency, and confidence in the financial system.