AMN / Mumbai , August 25
Reserve Bank of India (RBI) Governor Sanjay Malhotra, in his inaugural address at the FIBAC 2025 Conference, laid out a comprehensive roadmap for India’s financial system, emphasizing resilience, inclusive growth, balanced regulation, and technological transformation. Speaking on the theme “Charting New Frontiers”, Malhotra underlined the country’s economic achievements, challenges, and opportunities as it aspires for Viksit Bharat by 2047.
India’s Resilient Economic Story
Malhotra began by noting that India, celebrating its 79th year of independence, has achieved “remarkable progress across sectors” and continues to symbolize resilience and hope. He pointed out that despite global disruptions, the Indian economy rebounded strongly post-COVID, registering an average 8% annual growth between 2021-22 and 2024-25. Inflation, once a major concern, fell to a historic low of 1.6% in July 2025.
He stressed that fiscal indicators have improved significantly, with the central government’s fiscal deficit projected to fall to 4.4% of GDP in FY 2025-26. Banks and corporates, he added, are in their best financial health in decades—well-capitalized, profitable, and supported by strong balance sheets. Foreign exchange reserves of USD 695 billion, covering more than 11 months of imports, provide additional security.
Monetary Policy and Inflation Management
On monetary policy, Malhotra highlighted RBI’s dual focus: ensuring price stability while supporting growth. He credited proactive measures, including timely interest rate adjustments and coordination with government supply-side interventions, for anchoring inflation expectations. He reassured that RBI would continue balancing growth with stability through a calibrated approach.
Regulatory Philosophy – “Right Amount of Friction”
A significant portion of the Governor’s speech was devoted to the regulation of banks, NBFCs, and other financial entities, which account for nearly three-fourths of credit to the real economy. Malhotra described regulation as “friction”—too little risks instability, too much hampers growth. RBI, he said, strives for optimal balance by ensuring safety without stifling expansion.
He outlined RBI’s principles of regulation: principle-based rather than prescriptive, proportional, consultative, evidence-driven, and adaptable. Citing recent initiatives, he mentioned rationalisation of norms for cooperative banks, updated PSL guidelines, improved liquidity coverage rules, and a revamped framework for Alternative Investment Funds.
Looking ahead, he announced a Regulatory Review Cell to periodically reassess rules for efficiency and relevance, and reaffirmed RBI’s commitment to implementing Basel III risk guidelines by 2027.
Push for Financial Inclusion and MSME Support
Stressing that “economic development is incomplete if it is not inclusive,” Malhotra urged banks to deepen financial services in rural India, strengthen Business Correspondent (BC) networks, and expand financial literacy initiatives. He also called for targeted credit support to MSMEs, leveraging public digital platforms such as the Unified Lending Interface (ULI).
Customer Service and Trust in Banking
Malhotra reminded institutions that “consumers are the raison d’être” of financial services. He emphasized transparency, fairness, and customer delight as central to sustainable growth. Highlighting gaps in grievance redressal, he urged banks and NBFCs to strengthen internal ombudsman mechanisms and adopt root-cause analysis for recurring complaints.
He noted ongoing reviews of the RBI’s Ombudsman framework to enhance compensation standards and expand services under penalty provisions for delayed delivery. He further recommended incorporating customer satisfaction as a performance metric for senior executives.
Technology as a Driver of Transformation
On technology, Malhotra underscored its role as a “core engine” of efficiency, not just a support tool. He highlighted RBI’s initiatives like the Account Aggregator (AA) framework, Unified Lending Interface (ULI), and PRAVAAH digital platform as steps toward seamless credit delivery and enhanced regulatory services. He urged regulated entities to adopt AI and ML solutions to stay ahead in efficiency and customer service.
Call for Shared Responsibility
In his concluding remarks, Malhotra stressed that regulators and financial institutions are not adversaries but partners in ensuring stability and growth. He called upon banks and corporates to harness their healthy balance sheets to drive a new investment cycle, fuelling India’s growth ambitions.
Invoking Gandhi’s talisman, he urged industry leaders to always consider the impact of their actions on the most vulnerable citizens. “Financial stability and price stability are not barriers to growth—they are essential for sustainable growth,” he asserted, emphasizing RBI’s vision of building a resilient, inclusive, and technology-driven financial ecosystem for a prosperous India.
