RBI Governor Sanjay Malhotra on Monday urged corporates and banks to boost investments despite tariff uncertainties and geopolitical challenges, stressing that the central bank has not lost sight of growth objectives.
Speaking at the annual Fibac event, the Governor said he is hopeful that the ongoing negotiations between the US and Indian trade representatives will yield a decision which will “minimise” the impact of tariffs on the domestic economy.
Amid concerns on the US move to slap 50 per cent tariffs on Indian goods and the likely impact on textiles, shrimps etc, Malhotra assured sector-specific help if some sections of the economy feel the heat. Making it clear that monetary policy will take on board both inflation and growth dynamics, Malhotra said, “We are at a critical juncture with challenges emanating from the geopolitical front and tariffs, and focused more on ways of ensuring economic expansion.”
“At the time when the balance sheets of the banks and the corporates are at their best, they should come together and drive the animal spirits to create an investment cycle, which is so important at this juncture,” Malhotra said.
Malhotra said the focus on financial stability and price stability does not “inhibit” growth and there is no “tussle” between financial stability and growth. Amid credit growth dipping to a three-year low in FY25, Malhotra said, “We are examining measures to expand bank credit across sectors.”
The RBI is “examining measures to enhance bank credit”, Malhotra said, without elaborating on the precise moves being planned.
Malhotra also said that the RBI is working on ease of doing business for the regulated entities, which will also help reduce the cost of intermediation.
Acknowledging that RBI’s focus to give more autonomy to banks has led to an overburdening of bank boards, Malhotra said the RBI is trying to “rationalise” some of these macro policies that need to be approved by the boards, and leave the procedural aspects of the same to the managements.
Deepening financial inclusion and credit to small businesses, and enhancing customer service were called out as a priority for the RBI by the Governor. “While we have opened accounts for almost the entire adult population courtesy the Jan Dhan Yojana, there is a scope for enhancing it,” Malhotra said.
(With inputs from PTI)