RBI to review banks’ participation in non agri derivatives after SEBI suggestion

The Reserve Bank of India will evaluate the Securities and Exchange Board of India’s proposal to allow banks to participate in non agricultural derivatives, Governor Sanjay Malhotra said on Friday. At the post monetary policy press conference, Malhotra confirmed that the proposal had reached the central bank recently and would be examined in detail.

He added that such a move may require legislative changes. "That proposal has just recently come to us. We will study that… Under the Banking Regulation Act, banks are not allowed to partake in such product or asset class at present. So the current Act may need amendment or amendments," he said.

Malhotra also pointed out that similar proposals were reviewed in the past. "This issue is not just limited to regulatory aspect… Have things changed in the past eight to nine years? We will study that," he said, adding that giving a firm view without analysis would be incorrect.

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Currently, non agri derivatives are traded on stock and commodity exchanges, but banks are not permitted to enter this segment.

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Inflation outlook and the rupee

The RBI’s inflation projection of two per cent for 2025 to 2026 incorporates the current value of the rupee, the Governor confirmed. "We have factored in current levels of rupee in our estimates," he said. He explained that a five per cent depreciation of the rupee tends to increase inflation by about thirty five basis points. It also boosts exports and GDP growth by around twenty five basis points.

IMF grade on national accounts not about data quality: RBI

Responding to the IMF’s grading of India’s national accounts at category C, Deputy Governor Poonam Gupta clarified that the rating concerns only the age of the base year and not the reliability of India’s economic data.

"It is not about quality of the data, it is not about the sanctity of the numbers that are put out. It is about the base that has been perceived to be outdated. With this revision, I think they would be satisfied on this count," she said.

On the IMF’s observation regarding the rupee’s exchange rate regime, Gupta said India follows a managed float similar to other emerging markets. She added that the IMF’s sub classification, based on a six month volatility review, should not be over interpreted.

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RBI cuts repo rate

Earlier in the day, Governor Malhotra described India’s macroeconomic environment as a rare goldilocks period marked by strong growth and very low inflation. The statement came alongside the RBI’s decision to reduce the repo rate by twenty five basis points to 5.25 per cent after its three day policy review.

The RBI lowered its CPI inflation forecast for 2025 to 2026 to 2.0 per cent and raised its GDP growth projection for the full year to 7.3 per cent, supported by robust consumption and the GST rate rationalisation of September 2025.

India’s real GDP grew 8.2 per cent in the second quarter of 2025 to 2026 after recording 8.0 per cent growth in the first half of the year. "Growth at 8.0 per cent in H1 2025 26 and inflation at a benign 2.2 per cent present a rare goldilocks period," Malhotra said. Given the favourable macroeconomic conditions, the Monetary Policy Committee voted unanimously for the twenty five basis point cut while maintaining a neutral stance.