Reserve Bank of India Governor Sanjay Malhotra speaks during FIBAC 2025, the two -day annual bank conference on the theme ‘Mapping New Frontiers’, in Mumbai | Photocredit: PTI/Kunal Patil
The Reserve Bank of India (RBI) will not be found who wants to support the economy, including the sectors that can be affected by the American rates, said Governor Sanjay Malhotra.
A specific question about MSMEs and specific sectors that are affected because of steep American rates, Malhotra emphasized that the RBI has always been very proactive in what should be done for the progress and growth of our country.
“As far as the rates are concerned, we had, after the announcements of April 2025 by the US of raised rates (initially 26 percent, which was later adjusted to 25 percent), revised our GDP growth down by 20 basic points (from 6.7 percent to 6.5 percent).
“After that there was an extra rate of 25 percent, making it 50 percent. It still has to start … a few more days, we hope that the tariff negotiations will take place and the impact will be minimal,” said the Governor on the Banking Summit of Ficci-IBA.
He noted that there are a few sectors, where these rates remain (45 percent are outside the tariff regime, but the remaining 55 percent is in it), some such as precious stones and jewelry, textiles, clothing, shrimp and msme’s could see a possible impact.
“The government, for its part, is looking at free trade agreements, which have been in the making for some time. And we have had RBI a relaxation cycle for some time (we have reduced the Repo rate with 100 basic points), we have given sufficient liquidity to the banking sector.
“And what else is needed to support the growth of the economy, including those of the sectors that are more affected by the American rate), if it happens that way, we will not be found in our work,” Malhotra said.
When using the rupid in settling trade transactions, the governor noted that the internationalization of rupees is an important area on which RBI has been working for a long time.
‘It is important that countries develop trade in local currencies. So the RBI has also moved in this direction. A number of steps have been taken.
“We have similarities with four countries – Maldives, Mauritius, Indonesia and the VAE – and the trade has taken place in local currencies. It will help industry, the economy as a whole, because it dampens us from the volatility of the movements of the currency exchange and we will continue to promote this,” he said.
Malhotra underlined that the trade in local currency trade is a slow process – it will take years, it will take decades – before it happens. It will evolve.
The governor said that India is now at a critical moment while navigating a turbulent global economic environment, characterized by increased commercial uncertainty and persistent geopolitical tensions.
“We have to push the boundaries of growth. We all have to perform our efforts to tackle the emerging challenges and at the same time to seize the opportunities that come to us,” he said.
Published on August 25, 2025
#American #rates #RBI #support #economy #Gouverneur #Malhotra