RBI-Finance Ministry Post-Budget Meeting: CBDC not a cash substitute, no liquidity crunch in productive sectors, says Sanjay Malhotra

RBI Governor Sanjay Malhotra and Finance Minister Nirmala Sitharaman took questions at a joint media briefing after a customary post-Budget meeting in the national capital on Monday. The press conference followed the Union finance minister's meeting with the central bank's central board of directors. The 621st meeting of the board of directors was held under governor Malhotra's chairmanship. The board assessed the global and domestic economic landscape, factoring in the challenges arising from geopolitical developments and financial market volatility.

Here are key takeaways from the briefing:

Finance minister

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• It is premature to say what impact the current status of the India-US trade deal will have on the economy
• The Ministry of Commerce and Industry is reviewing the situation; it is early to comment

• All the gold available in the market is imported

• We are watching gold prices right now

• The situation is becoming a matter of concern

• Government is closely monitoring gold prices

• RBI is also monitoring the situation

• Purchases by several central banks in gold and silver have led to the rise in gold and silver prices

• Gold is always an investment for households, seen seasonal spikes during festival season

• RBI has sufficient liquidity

• We have said earlier as well -- and continue to say -- that banks should focus on their core sector

• There is no issue if banks earn money through lending; that is their core function

• The concerns of bank deposit holders need to be understood

• There is no point in creating pressure to sell insurance products along with home loans

• Don't clearly know if mis-selling is an offence under Bharatiya Nyaya Sanhita (BNS)

• Banks should focus on their core business

• We are happy that the RBI has taken steps to curb mis-selling

• We have credit availability for up to five years

• We will fulfil whatever the country needs

RBI governor

• Central Bank Digital Currency (CBDC) is not a substitute for cash at the moment
• Monetary Policy Committee (MPC) takes the call on rates based on the latest inflation and growth data
• Central bank's GDP growth projection stands at 6.8-7.2 per cent for FY27
• Good growth rate this year as well
• We have sufficient reserves
• There is no liquidity crunch in the economy's productive sectors
• Rs 20,000 crore increase in net borrowings in Budget
• Net borrowings expected to decrease next year
• Loan arrangements for the rural and MSME sectors are a priority area

• If there have been changes in the CPI methodology, we will also have to make changes

• Adjustments will be made in the April policy

• While the methodological changes are material in terms of coverage, representativeness and volatility, they are not substantial enough by themselves to necessitate a change in the inflation target

• RBI had earlier published a discussion paper and submitted its recommendations to the government

• The decision on the target would be announced by the authorities

• RBI's upcoming projections to reflect the revised base year and updated methodology of CPI and GDP

• The revised framework would be taken into account in the RBI's next set of projections to be released during the April monetary policy

• Methodology has been changed, which will help in better estimating CPI inflation

• Banks have sufficient funds and they are very well positioned to be able to meet their needs, as well as the credit needs of Indian economy

• Growth in deposit and credit to hand-in-hand

• They are very highly correlated as every rupee of credit creates a rupee of deposit

• But there are business cycles, there are leakages as a result of which the growth rates for short periods of time the deposit and credit can be dissimilar

• It is a natural thing

• Deposit rates have gone up now because credit rates have gone up

• Banks will be in full position to meet whatever are the credit needs

• The decision on Margin Trading Facility (MTF) was taken after stakeholder consultation; there is no plan to make any changes at present

• Banks have a capital adequacy ratio of 17 per cent

• Even if no fresh capital comes in over the next five years, banks’ capital requirements will still be adequately met

• More than Rs 1 lakh crore of FDI investment flowed into banks last year

• The reduction in US securities holdings was only due to dollar valuation changes

• We are monitoring IDFC First bank’s condition; this is not a systemic issue

• As a policy, we do not comment on any individual bank or regulated entity; we are watching the development