RBI Governor: India’s Growth Unshaken by Global Tariffs

Reserve Bank of India (RBI) Governor Sanjay Malhotra on Monday emphasized that India’s economic growth remains a priority despite global tariff uncertainties and geopolitical tensions. Speaking at the FIBAC 2025 conference in Mumbai, Malhotra called for stronger collaboration between banks and corporates to ignite an investment cycle critical for India’s ambitions, particularly as US tariffs threaten sectors like textiles and shrimp.

Malhotra expressed optimism about ongoing US-India trade negotiations, hoping they will minimize the impact of the US’s 50% tariffs on Indian goods. “We are at a critical juncture, but the RBI has not lost sight of growth objectives,” he said, assuring sector-specific support for industries facing challenges. He stressed that monetary policy will balance inflation and growth dynamics, with no conflict between financial stability and economic expansion.

With credit growth at a three-year low in FY25, Malhotra revealed that the RBI is exploring measures to enhance bank credit across sectors, though he did not specify details. C S Setty, chairman of the State Bank of India (SBI) and the Indian Banks’ Association (IBA), noted a decline in corporate credit demand, as firms increasingly turn to private credit and capital markets. He urged banks to finance long-term capital expenditure to fuel India’s growth.

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Ruchin Goyal of BCG highlighted that corporate lending has dropped to 36% of total system exposure, down from 60% a few years ago, underscoring the shift in funding patterns. Setty also advocated for allowing banks to engage in acquisition finance for top companies, a currently restricted area.

Malhotra outlined the RBI’s broader agenda, including easing business regulations for banks to reduce intermediation costs and rationalizing policies to lessen the burden on bank boards. The RBI is also preparing to implement Basel-III norms and issue guidelines for expected credit loss, with public feedback to follow.

Financial inclusion remains a key focus, with Malhotra noting that while Jan Dhan Yojana has opened accounts for nearly all adults, further enhancements are needed. He called for strengthening business correspondent networks and expanding their services to deepen financial access, particularly for small businesses. The RBI is also reviewing its internal ombudsman framework to improve customer service and plans to leverage the unified lending interface to address credit gaps for small enterprises.

Malhotra’s remarks come amid a challenging global environment, with US tariffs and geopolitical risks posing threats to India’s 6.5% GDP growth forecast for FY26. Despite these headwinds, he remains confident in India’s robust fundamentals and supportive policies, positioning the country to navigate global uncertainties while seizing growth opportunities.

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