The central bank underlined that maintaining adequate systemic liquidity remains a priority, even as policy rates and the stance are kept unchanged, to support orderly market conditions and sustain the policy impulse.
“We also propose to remove the limit of Rs 2.5 lakh crore for investments under the Voluntary Retention Route (VRR). Investment through the VRR in each category of securities will be subject to the investment ceiling for the respective category under the General Route,” Malhotra said.
The MPC outcome pointed to a largely stable macroeconomic backdrop, with core inflation steady at 2.6% in December. India’s external sector also remained resilient, with merchandise exports growing 7.9% in Q3 FY26, while foreign exchange reserves stood at a healthy $723 billion as of January 30.
The committee marginally revised its CPI inflation projection for July-September FY27 to 4.2% from 4% earlier, signalling some near-term price pressures. In addition, interest rate transmission for scheduled public sector banks was estimated at around 94 basis points, reflecting the continued pass-through of policy rates into the banking system.
In his address, the RBI governor said the central bank’s inflation outlook remains comfortable, with CPI inflation for FY26 projected at 2.1%. The RBI expects price pressures to stay broadly contained, supported by stable domestic conditions and manageable demand trends.
On a quarterly basis, CPI inflation is estimated at 3.2% in Q4 FY26, before edging up to around 4% in Q1 FY27 and 4.2% in Q2 FY27. While this signals a modest near-term uptick in prices, inflation is still expected to remain comfortably within the RBI’s tolerance band.Malhotra also noted that underlying inflation pressures remain largely muted across most categories. The main area of volatility continues to be precious metals, where global price movements have caused fluctuations, while broader price trends across the economy are considered stable and under control.
The MPC noted that liquidity and profitability of scheduled commercial banks remain stable, while bank credit growth has picked up in recent months, reflecting an improvement in lending activity. The RBI also proposed several regulatory measures, including draft guidelines on customer protection, new norms to curb mis-selling and streamline loan recovery practices, and a framework to minimize customer impact in small-ticket fraud cases.
On the financial stability front, NBFCs were assessed to be on a sound footing. The central bank further proposed allowing banks to lend to REITs to deepen financing avenues, alongside plans to enhance credit access for small businesses by raising the collateral-free loan limit for MSMEs from Rs 10 lakh to Rs 20 lakh.
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