In the midst of the current tariff war, the governor of the Bank of the Reserve, Sanjay Malhotra, said that the Central Bank will closely monitor the global panorama in rapid evolution and will continue to be “agile and proactive” in its political movements. While the Indian economy and financial markets have shown a remarkable resilience, warned that they are not immune to global uncertainties and volatility.
“In view of the situation in rapid evolution, especially in the global front, we are monitoring and continuously evaluating economic perspectives. We will be agile and proactive in our political actions,” said Malhotra at the 24th Annual Annual Conference of FIMMDA-PDAI.
Stable inflation perspective, but global risks remain
He said that the balance of growth inflation has improved considerably, with a main inflation projected to align with the 4 percent objective in fiscal year 2016. However, winds against global and climate -related risks could still affect this perspective.
“However, although we have projected a real growth of somewhat lower GDP for Fy26 to 6.5 percent, India remains the fastest growing economy. However, this is below our aspirations. We have reduced repo rates twice and end up.”
Stable financial markets; Soft G-SEC loans
Malhotra said that all segments of the financial markets of India, including Forex, government values and monetary markets, have been largely stable. He thought that the rupee faced some pressure a few months ago, the recovered land has been extended.
While the Variable Income Markets saw corrections and capital outputs, similar to other emerging markets, the constant government stock market. Combined loans from central and state governments, for a total of RS 24.7 Lakh million rupees in fiscal year 2015, were made without any interruption.
Loan costs for the center fell into 28 basic points to 6.96 percent in fiscal year 2015, compared to 7.24 percent in fiscal year 2014. Secondary market activity in government values remained solid, driven in part by the inclusion of India in global bond rates.
Malhotra said the markets have evolved within a regulated framework and adapted to changing regulatory approaches. The Forex market, in particular, has become more transparent and liquid, with narrow extensions of the supply axis.
Hello, it also addressed the extension of the currency negotiation beyond the standard hours since January 2020. Although the volumes are still modest, the activity is gradually expanding around the edges of the Onthore market window.
“Fair treatment and price transparency for smaller and less sophisticated Forex customers continue to be a group. The price gap between large and small customers is much broader than the operational costs they can justify,” he said.
The RBI has announced plans to enable Forex retail access through Bharat Connect. In their pilot phase, people can buy US dollars, with greater expansion based on early experience.
Malhotra also marked the use of bank channels by unauthorized currency trade platforms, shutter for greater surveillance and stronger efforts of customer consciousness. The RBI has been active updating its alert list and making public campaigns to highlight the risks.
“Today, financial markets are in a critical situation, balancing global and national challenges with unprecedented opportunities and increasing expectations. It’s like resolving complex puzzle with moving parts and interested parties,” he said.
He stressed that financial markets must support India’s growth by guaranteeing efficient and profitable financing aligned with national aspirations.
Call the monetary market liqueness, marked asymmetric rates
Malhotra urged banks to ensure that RBI’s liquuidity measures are transmitted in all market segments, marking Conern on asymmetric rates between the call money market, the market repository rate and the TREPS.
The approach that the reduced liquidity on the need of the call market market, especially the call rate, is the operational objective for monetary policy. The market is also key to Mibor’s robustness, the reference point for the interest derivatives market.
“This requires a more proactive participation by banks: the only entities with access to RBI’s liquidity, the call market market and the repo market. They must guarantee the perfect transmission of the RBI liquidity position,” he said.
He also reiterated that, although India remains the fastest growing economy worldwide, real GDP growth of 6.5 percent projected for fiscal year 2016 is still below the country’s ambitions.
You need to expand participation in G-SEC markets
The Governor of RBI requested a deeper output of the secondary market in government values to benefit smaller participants, such as cooperative banks, pension funds and forecasting funds. Referring to the RBI Retail Direct scheme launched in 2021, he said it is crucial to ensure that investors can make transactions at fair prices.
He pointed out that the rotation index in government values with date remains modest: only approximately 1 indication of liquus is concentrated in some values, despite the shortest tenors.
Malhotra also pointed out that secondary market activity is dominated by primary banks and distributors, while most institutional investors tend to maintain values until expiration. Among more than 3,000 institutional investors in G-SEC, the 10 best represented a third of the total negotiation volume in 2024. Hello, he added that the interest of foreign investors in the G-SEC market has increased after the inclusion of India in global bond rates.
