RBI Policy 2025: Reserve Bank of India (RBI) Governor Sanjay Malhotra on Friday clarified that the central bank is proceeding with caution, but the need to show courage has led to the recent relaxation of rules governing the activities of banks.
In an event organized by State Bank of India (SBI), Malhotra clarified that more responsibilities on banks are due to their better performance and better functioning. The central bank has sufficient resources to curb any wrong behavior.
Governor gave information
Sanjay Malhotra said that RBI does not want to micro manage. No regulator can and should not replace ‘boardroom’ decisions. Each case must be considered on merit by the regulated entity. RBI had announced several measures last month.
These include allowing banks to provide funds for domestic acquisitions and foreign borrowing for the real estate sector. Since assuming office, Malhotra has emphasized on ease of doing business and keeping rules in mind before announcing any steps. Explaining the logic behind these steps, Malhotra said, “While we are proceeding with caution, we also have to show courage.”
Giving further information, the Governor said that, compromising financial stability while chasing short-term growth will have a long-term impact on growth which may increase costs. He said that the central bank needs to be conscious of the economic context and maintain balance. Clarifying on the move to allow real estate companies to borrow from abroad, Malhotra said that the ECB’s permission is only for projects conforming to foreign direct investment (FDI) norms.
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