Ready to listen: Sanjay Malhotra, Governor, Reserve Bank of India | Photocredit: Dhiraj Singh
“We must be aware that we do not have the monopoly of all knowledge,” said Reserve Bank of India (RBI) Governor Sanjay Malhotra in his first public statement after taking over the institution entrusted to handling government finances and have provided stable inflation and growth.
Although the RBI has done a laudable work under its earlier leadership, the consultative position must continue, Malhotra emphasized. “Consultation is another important pillar of our policy -making … This is one thing I will continue to do,” he said.
Almost nine months after his role, consultation is the precise theme that the new governor has taken over strongly while the new regulations are completed or existing regulations have adjusted, bankers say.
Large movements
Malhotra’s first important decision came back in February-the higher risk weight that was imposed on bank loans to non-bank financial companies (NBFCs) in 2023. The Central Bank also reduced the risk weight requirements for loans that were extended to microfinancing companies.
The switch to increasing the risk weight in bank loans to NBFCs had dried the primary financing channel of the latter.
Banks were extremely careful in the loans to NBFCs that were assessed under the ‘A’ category, as reflected in sectoral credit implementation data.
“If there is a policy contract, it has an immediate impact on monetary policy and the convenience of doing business. In the last two years, banks were bound by a higher risk weight on uncovered loans and NBFCs. It went to extreme, and he brought it back to a reasonable state,” said a senior private banker.
The new governor also led to the presence of sufficient liquidity in the banking system, in a large relief for lenders confronted with liquidity crunch in the midst of a falling share of cheap deposits, he added.
In April, the RBI reduced the drainage percentages assigned to retail deposits and deposits of ‘non-finance companies’ for the calculation of the liquidity coverage ratio (LCR).
According to the final guidelines, which will come into effect from 1 April 2026, a bank will have to assign an extra run-off factor of 2.5 percent (against the 5 percent prescribed in the draft circular spent in July 2024) for retail deposits that are possible via internet and mobile banking facilities.
Pragmatic regulations
In June, the RBI facilitated the final standards that regulate the gold loan activities, and stipulates that lenders should maintain 85 percent loan / value (LTV) ratio for consumption -related gold loans under £ 2.5 Lakh, compared to 75 percent earlier. For consumption lenses that are supported by golden collateral, the LTV ratio is set at 80 percent for £ 2.5-5 Lakh ticket sizes and 75 percent for loans above £ 5 lakh.
George Alexander Muthoot, MD van Muthoot Finance, said that the new governor represents a decisive shift to a more progressive and pragmatic regulatory approach, especially for the golden loan sector. “They acknowledge the important role that Gold Loans play in offering reliable, fast and including credit to households and small companies,” said Muthoot.
“By ensuring that regulations are growth-oriented and yet protecting stability, the RBI helps to find the right balance between caution and progress,” he added.
In June, the RBI facilitated the standards for project financing, which means that lenders are 1 percent decisive for standard loans investigated in the lower classes versus the 5 percent proposed in the draft circular. It is important that the supervisor made it clear in the event of a large relief for lenders that the new facilities requirements would apply prospective.
AIF schedules
In July, the regulator relaxed the standards for the investments of lenders in Altistative Investment Fund (AIF), so that an individual credit entity up to 10 percent of the corpus of an AIF scheme can invest and all lenders enable all lenders to invest up to 20 percent of the corpus.
According to Gopal Srinivasan, chairman and general director, TVS Capital Funds, while the supervisor was the same to introduce more strict standards for the investments of lenders in AIF schemes – stating Evergreening of Loans – The new Governor has appreciated the industrial opposition, the Light of Sebi’s Perspective and lasting the Light of Sebi’s Perspective and Light of Sebi’s Perspective and Sebi’s Light and Duurable Perspective and Sebi’s Light and Duurable Perspective and Sebi’s Light Perspective and Sebi’s Perspective and Light Perspective and Light Perspective and Sebi’s Perspective, Framework.
Focus for pro-growth
A majority of bankers line Speaked with this story said that Malhotra had chosen a consultative approach with the industry to propel GDP growth, in the midst of benign inflation and stable tax shortage trends.
“He did what he had to do and he did it faster than anyone thought. Monetary policy acts with a delay in both tightening and relaxing cycles. There is a reach to lower the repo rate more, but not immediately. Stable oil price and rupid will help further cuts and the propel of the PROPEL, ” -Bankier was previously quoted.
R Gandhi, former deputy governor at RBI, said that the regulator had always maintained a consultative approach and at the same time crucial regulations were completed.
“It is not the case in which the supervisor did not consider feedback from the industry. They take realities into account. Of course, when a new governor is appointed, they see feedback with a new spirit and they do not trust existing assumptions,” he said.
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Published on September 1, 2025
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