Reserve Bank of India Governor Sanjay Malhotra on Saturday, February 8, said the central bank was examining all suggestions on project financing draft norms and will take the same to a consultative process. Following this, the RBI will give sufficient time to implement them across expected credit loss (ECL), liquified coverage ratio (LCR) and project financing.CompanyValueChange%ChangeMalhotra was addressing a press conference where he also spoke about currency management, liquidity, the recent repo rate cut’s aim to boost consumption and more. He said the central bank has been focusing on ease of credit and will take forward the Unified Lending Interface (ULI) to the last mile.”We will give sufficient time for LCR rollout. We will also give sufficient time in phases where ever there are major changes in the guidelines,” he said.
RupeeMalhotra said rupee depreciation is determined by market forces. “We have a number of instruments at our disposal and we are using them. We are not worried on this account,” he said.The rupee hit a record low of 87.58 against the US dollar on February 6, 2025.The RBI governor said the central bank’s approach towards currency management has not changed. It does not target any specific price or band for the Indian rupee. He said any asset tends to see ups and downs from day to day, and that should not be the focus.Malhotra said the focus should be on medium-to-long-term changes. He added the market forces are efficient and trustworthy and the central bank depends on it to determine the INR levels.
LiquidityMalhotra during his inaugural monetary policy statement on Friday emphasised the central bank’s commitment to monitoring the evolving liquidity and financial market conditions. The governor noted that some banks are hesitant to lend in the uncollateralised call money market, choosing instead to park funds with the RBI. To address this, the RBI implemented measures to inject liquidity into the banking system.Reiterating the same on Saturday, the RBI governor said the central bank has provided both, overnight liquidity and durable liquidity measures. Going forward too, the RBI will be watchful, alert and nimble in liquidity management keeping in mind the requirements of the banking system, he said.He also said the RBI has a number of measures to manage liquidity which it is using actively.Inflation”We are alert to all inflationary forces,” Malhotra said. “Every 5% depreciation in rupee leads to about 35 baisi point rise in inflation as per our calculation, which is kept in mind,” he added.Repo rate cutThe RBI MPC decided to cut the repo rate by 25 bps to 6.25%. Malhotra said the same should help boost consumption. “We have kept the stance ‘neutral’ and the MPC will take a call on rates going ahead,” he said.CryptocurrencyThe governor also spoke about regulations required around cryptocurrency. Without revealing much details, he said a discussion paper on cryptocurrency is planned but it would not be appropriate for him to give a view before the paper is published.
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