Reserve Bank of India Governor Sanjay Malhotra speaks on Monetary Policy Statement, in New Delhi on December 5, 2025. Photo: YouTube/Reserve Bank of India

Reserve Bank of India Governor Sanjay Malhotra during a press conference in Mumbai, Maharashtra, on October 1, 2025
| Photo Credit: RBI

In this screengrab received on October 1, 2025, Reserve Bank of India Governor Sanjay Malhotra speaks on Monetary Policy Statement, in New Delhi. Photo: RBI via PTI Photo

RBI Governor Sanjay Malhotra during a press conference at RBI headquarters in Mumbai on February 7, 2025.
| Photo Credit: PTI

Lowering India’s interest rates for the first time in the last 57 months, the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) on Friday unanimously cut the repo rate by 25 basis points (bps) to 6.25%, to support fading growth in the hope of inflation easing to 4.4% in this quarter and 4.2% through 2025-26.

The central bank’s policy shift, that may translate into cheaper loans for homes, cars and other purposes, comes within a week of the Union Budget for 2025-26 that seeks to drive growth by stimulating urban demand with income tax breaks worth ₹1 lakh crore.

Also read: RBI MPC meeting 2025: Banks to have ‘bank.in’ internet domain name, non-banks ‘fin.in’

The repo rate is the rate at which the RBI lends to other banks, and one basis point equals 0.01%. This is the first repo rate cut since the early days of the COVID-19 pandemic, when the RBI made a 40 bps cut to 4% in May 2020 and held it there for a couple of years. Since 2022, the repo rate has been on the rise.

‘Neutral stance’

In view of the risks from global uncertainties and upside risks to inflation, the MPC decided to persist with a neutral monetary policy stance, and stay “unambiguously focussed on a durable alignment of inflation with the target, while supporting growth,” RBI Governor Sanjay Malhotra said after the first monetary policy review under his stewardship.

Stating that headwinds from geopolitical tensions, protectionist trade policies, volatility in international commodity prices, and financial market uncertainties continue to pose downside risks to the outlook, the MPC has projected a real GDP growth of 6.7% for 2025-26 from the 6.4% estimated this year.

Assuming a normal monsoon next year, Mr. Malhotra said that the MPC expected the declining inflation to further moderate in the coming year, gradually aligning with the target. Inflation is projected to average 4.5% through the first quarter (Q1) of 2025-26, 4% in Q2, 3.8% in Q3, and 4.2% in Q4. The risks are evenly balanced, he said.

Mixed signals

“Rural demand continues to be on an uptrend, while urban consumption remains subdued with high frequency indicators providing mixed signals. Going forward, improving employment conditions, tax relief in the Union Budget, and moderating inflation, together with healthy agricultural activity bode well for household consumption,” the RBI Governor said.

Also read:RBI Monetary Policy 2025 key highlights

Noting that the MPC had factored in the rupee’s recent decline in its policy math, Mr. Malhotra emphasised that the RBI’s stated objective was to maintain orderliness and stability in the currency market, without compromising market efficiency. “Accordingly, our interventions in the forex market focus on smoothening excessive and disruptive volatility rather than targeting any specific exchange rate level or band. The exchange rate of the Indian Rupee is determined by market forces,” he asserted.

Also read: RBI projects FY26 inflation at 4.2%, down from 4.8% estimate in 2024-25

Liquidity crunch

India’s current account deficit is likely to remain well within “the sustainable level”, the RBI Governor said, adding that foreign exchange reserves stood at $630.6 billion as on January 31 this year, providing an import cover of over 10 months. “Overall, India’s external sector remains resilient as key indicators stay robust,” Mr. Malhotra concluded.

Also read: RBI MPC meeting 2025: RBI projects 6.7% growth for FY’26 on better Rabi harvest, tax relief by govt

Acknowledging that liquidity has been tight over December and January, Mr. Malhotra announced fresh initiatives to ease the crunch. “We will continue to monitor the evolving liquidity and financial market conditions, and proactively take appropriate measures to ensure orderly liquidity conditions as may be required for the system… not just overnight liquidity, but also durable liquidity,” he said.

Reserve Bank of India’s (RBI) new Governor Sanjay Malhotra.
| Photo Credit: PTI

Facing criticism from the government over the central bank prioritising inflation over growth, the new RBI Governor Sanjay Malhotra on Monday (December 30, 2024) said that prospects of the Indian economy are expected to improve on the back of high consumer and business confidence in 2025.

“As we strive to preserve financial stability to support a higher growth path for the Indian economy, our focus remains steadfast on maintaining stability of financial institutions and, more broadly, systemic stability,” Mr. Malhotra said in foreword to the Financial Stability Report.

He further said that despite the global uncertainties Indian economy is expected to pick up pace in the second half of the current financial year.

“Notwithstanding the uncertainties shrouding the global macro-financial ethos as it unfolds, prospects for the Indian economy are expected to improve after the slowdown in the pace of economic activity in the first half of 2024-25.

“Consumer and business confidence for the year ahead remain high and the investment scenario is brighter as corporations step into 2025 with robust balance sheets and high profitability,” said Mr. Malhotra who took over as 26th Governor earlier this month.

Flagging the issue of growth moderation in the first half, the Finance Ministry in its November Monthly Economic Review had raised concerns that the possibility that structural factors may also have contributed to the slowdown in H1 should not be ruled out.

India recorded a slowdown in GDP growth to a seven-quarter low of 5.4% for the second quarter ended September 2024. For the first half, the GDP growth stood at 6%.

Slowdown in growth and moderation in inflation are building case for RBI to slash policy rate in its upcoming Monetary Policy Committee meeting.

Mr. Malhotra further said that financial sector regulators in India too are intensifying reforms and sharpening their surveillance against the backdrop of the soundness of the financial system bolstered by robust earnings, low levels of impaired assets and strong capital buffers, as this report highlights.

Stress test results reveal that capital levels of the banking system as well as of the Non-banking Financial Companies (NBFCs) sector will remain well above the regulatory minimum even under adverse stress scenarios, he said.

“We continue to secure and anchor public trust and confidence to support India’s aspirational goals. We remain committed to developing a modern financial system that is customer-centric, technologically leveraged and financially inclusive,” he said.

Referring to the global economy, he said, it exhibits resilience in the face of formidable headwinds from political and economic policy uncertainty, persisting conflicts and an environment of fragmenting international trade and tariffs.

Brightening the global prospects is the likelihood that the decline in inflation will continue and align with targets during the year ahead, allowing purchasing power to recover, he said.

As monetary policy gains headroom to further support economic activity, financial conditions can be expected to remain easy and contribute to an improvement in the trajectory of global GDP from a prolonged phase of low growth, he said, adding, robust labour market and sound financial system too provide congenial conditions for this turnaround.

However, he said, the medium-term outlook remains challenging, with downside risks from possible intensification of geopolitical conflicts, sporadic financial market turmoil, extreme climate events and rising indebtedness.

Stretched asset valuations, fragilities in the less regulated non-bank financial intermediaries, and threats from new and emerging technologies also add to the evolving uncertain outlook, he added.

Mumbai:

Facing criticism from the government over the central bank prioritising inflation over growth, the new RBI Governor Sanjay Malhotra on Monday said that prospects of the Indian economy are expected to improve on the back of high consumer and business confidence in 2025.

“As we strive to preserve financial stability to support a higher growth path for the Indian economy, our focus remains steadfast on maintaining stability of financial institutions and, more broadly, systemic stability,” Sanjay Malhotra said in foreword to the Financial Stability Report.

He further said that despite the global uncertainties Indian economy is expected to pick up pace in the second half of the current financial year.

“Notwithstanding the uncertainties shrouding the global macro-financial ethos as it unfolds, prospects for the Indian economy are expected to improve after the slowdown in the pace of economic activity in the first half of 2024-25.

“Consumer and business confidence for the year ahead remain high and the investment scenario is brighter as corporations step into 2025 with robust balance sheets and high profitability,” said Mr Malhotra who took over as 26th Governor earlier this month.

Flagging the issue of growth moderation in the first half, the Finance Ministry in its November Monthly Economic Review had raised concerns that the possibility that structural factors may also have contributed to the slowdown in H1 should not be ruled out.

India recorded a slowdown in GDP growth to a seven-quarter low of 5.4 per cent for the second quarter ended September 2024. For the first half, the GDP growth stood at 6 per cent.

Slowdown in growth and moderation in inflation are building case for RBI to slash policy rate in its upcoming Monetary Policy Committee meeting.

Mr Malhotra further said that financial sector regulators in India too are intensifying reforms and sharpening their surveillance against the backdrop of the soundness of the financial system bolstered by robust earnings, low levels of impaired assets and strong capital buffers, as this report highlights.

Stress test results reveal that capital levels of the banking system as well as of the Non-banking Financial Companies (NBFCs) sector will remain well above the regulatory minimum even under adverse stress scenarios, he said.

“We continue to secure and anchor public trust and confidence to support India’s aspirational goals. We remain committed to developing a modern financial system that is customer-centric, technologically leveraged and financially inclusive,” he said.

Referring to the global economy, he said, it exhibits resilience in the face of formidable headwinds from political and economic policy uncertainty, persisting conflicts and an environment of fragmenting international trade and tariffs.

Brightening the global prospects is the likelihood that the decline in inflation will continue and align with targets during the year ahead, allowing purchasing power to recover, he said.

As monetary policy gains headroom to further support economic activity, financial conditions can be expected to remain easy and contribute to an improvement in the trajectory of global GDP from a prolonged phase of low growth, he said, adding, robust labour market and sound financial system too provide congenial conditions for this turnaround.

However, he said, the medium-term outlook remains challenging, with downside risks from possible intensification of geopolitical conflicts, sporadic financial market turmoil, extreme climate events and rising indebtedness.

Stretched asset valuations, fragilities in the less regulated non-bank financial intermediaries, and threats from new and emerging technologies also add to the evolving uncertain outlook, he added.

(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)

December 9 began as a routine day for North Block mandarins, with questions pertaining to the Finance Ministry to be answered in the Lok Sabha. But for avid observers of the economy and financial markets, the big question of the day was neither starred nor unstarred. It revolved around the Governorship of the Reserve Bank of India (RBI). The incumbent Shaktikanta Das, in his sixth year at the RBI, had just delivered a monetary policy that disappointed a government rooting for an interest rate cut, particularly after GDP growth slipped to just 5.4% between July and September.

Mr. Das, whose tenure was to expire on December 10, said the growth-inflation balance was off but asserted persistently high inflation also hurt consumption and growth. By Monday, reporters who had been running stories about another extension for him, had changed course in the absence of any official communiqué, floating names of senior bureaucrats who may replace Mr. Das. None had an inkling that name would turn out to be Union Revenue Secretary Sanjay Malhotra.

Unknown factor

They were not the only ones surprised — even Mr. Malhotra is learnt to have been informed just hours before his appointment was made public. The Rajasthan cadre, 1990-batch IAS officer is not the usual Finance Ministry insider picked for the top role at Mint Street. Like his predecessor, most such appointees had handled departments such as Economic Affairs, or held the Finance Secretary’s role, like the late R.N. Malhotra, who was the 17th RBI Governor.

Mr. Malhotra, who has spent almost all his life in North India, is a computer engineering graduate from IIT Kanpur, with a Master’s degree in Public Policy from Princeton University. His new role brings him to the heart of India’s financial markets Mumbai for at least three years.

“Not a whole lot is known about Mr. Malhotra’s views on current economic issues, so he is a relatively unknown figure from that perspective,” economists at Nomura Securities said. Others echoed the sentiment, chiming in with stuff like ‘we don’t know how he feels about growth and inflation but if the government has chosen him at this juncture, he could oblige them with a quicker and bigger rate cut cycle’.

Soft-spoken, inquisitive

A cricket and coffee aficionado, Mr. Malhotra is one of the most affable and soft-spoken, yet no-nonsense officials in service, known not just for his crystal-clear responses to questions, but also for his inquisitiveness. In media interactions, after one’s queries are done and dusted and if time permits, he would extend the chat over a cup of Coffee Board brew to glean some ground-level feedback on issues and perceptions doing the rounds.

On his Day One in office, Governor Malhotra revealed no bias towards either growth or inflation, saying he does not like to start playing his shots from the first ball of a match. But he promised to “put the best foot forward in public interest” once he gets a clear sense of the pitch, with an eye on the four policy pillars that mattered for people — growth, stability, certainty and trust, he noted.

Mr. Malhotra may be a mystery for Mint Street watchers, but having served as the Department of Financial Services Secretary, he has been on the central bank’s board, and is an authority of sorts on banking and financial sector reforms. Moreover, his Revenue role probably affords him a unique vantage point of the economy’s growth and consumption impulses, having overseen not just direct tax flows from corporates and households, but also the trends in goods and services trade that only granular details of GST, Customs and Excise trends can reveal. It is then not for nothing that the Centre’s revenue math (that hinges on growth assumptions) he has worked on in recent Budgets, has generally been spot on.

Mr. Malhotra knows a lot more about the economic terrain than many realise, and in his new innings, where constant communication plays an important role, the world is about to find that out — with or without rate cuts.

Mumbai:

Sanjay Malhotra on Wednesday took charge as the 26th Governor of the Reserve Bank of India (RBI).

He took charge as Governor for the next three years with effect from December 11, 2024, the Reserve Bank said in a statement.

Former revenue secretary mR Malhotra replaces Shaktikanta Das, who demitted office on Tuesday after a six years stint. 

(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)

New Delhi:
Sanjay Malhotra, a 1990-batch IAS of Rajasthan cadre, has been appointed as the Governor of the Reserve Bank of India (RBI). He will succeed Shaktikanta Das as the RBI chief.

Here are 5 facts on Sanjay Malhotra: