“We also propose to do away with the Rs 2.5 lakh crore cap on investments under the Voluntary Retention Route (VRR). Investments through the VRR in any category of securities will be subject to the investment ceiling for the respective category under the General Route,” Malhotra said. The MPC result indicated a broadly stable macroeconomic environment, with core inflation stable at 2.6% in December. India’s external sector also remained resilient, with goods exports growing 7.9% in the third quarter of FY26, while foreign exchange reserves stood at a healthy $723 billion as of January 30.
The commission has marginally revised its CPI inflation projection for July-September FY27 to 4.2% from 4% earlier, indicating some near-term price pressure. Moreover, interest rate transmission for mainstream public sector banks was estimated at around 94 basis points, reflecting the continued transmission of policy rates into the banking system.
In his address, the RBI Governor said the central bank’s inflation outlook remains comfortable, with FY26 CPI inflation projected at 2.1%. The RBI expects price pressures to remain largely contained, supported by stable domestic conditions and manageable demand trends.
On a quarterly basis, CPI inflation is estimated at 3.2% in the fourth quarter of FY26, before rising to around 4% in the first quarter of FY27 and 4.2% in the second quarter of FY27. While this indicates modest price appreciation in the near term, inflation is still expected to remain comfortably within the RBI’s tolerance band. Malhotra also noted that underlying inflationary pressures remain largely subdued across most categories. The main area of volatility continues to be in precious metals, where global price movements have caused fluctuations, while broader price developments across the economy are considered stable and under control.
The MPC noted that the liquidity and profitability of mainstream commercial banks remain stable, while bank credit growth has increased in recent months, reflecting an improvement in lending activity. The RBI has also proposed several regulatory measures, including draft guidelines for customer protection, new norms to combat mis-selling and streamline loan recovery practices, and a framework to minimize customer impact in cases of minor fraud.
In terms of financial stability, NBFCs were judged to be on sound footing. The central bank further proposed to allow banks to lend to REITs to deepen financing options, besides plans to improve credit access for small businesses by increasing the collateral-free loan limit for MSMEs from Rs 10 lakh to Rs 20 lakh.
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