Indian Many challenges will await the Reserve Bank in 2026 also. The biggest challenge for the RBI next year will be to control the valuation of the rupee, which slipped below Rs 90 against the US dollar this year. RBI completes its 90 years in 2025 and one of the biggest challenges for it this year is to handle the rapidly falling valuation of the rupee. The central bank says that its intervention in the market is not to save any level, but to reduce fluctuations. Despite this, the RBI sold foreign exchange reserves worth more than $ 38 billion in the first nine months of the year amid the weakening of the Indian currency. Experts believe that rupee management will remain challenging in future also.
Inflation reached record low level
record Amid inflation reaching its lowest level, the Reserve Bank of India announced to reduce the repo rate in 4 out of 6 monetary policy meetings in 2025. RBI reduced the repo rate 4 times this year by a total of 1.25 percent. RBI Governor Sanjay Malhotra termed it a ‘rarely balanced economic phase’ for the economy. The RBI Governor had started cutting interest rates to support economic growth right from his first MPC meeting in February. After this, in June he made the biggest cut of this year by 0.50 percent.
Despite all the challenges, the growth rate remained above 8%
Sanjay Malhotra, who completed one year as the Governor of the Reserve Bank of India, described the current situation as a ‘rarely balanced economic period’ for India, in which the country’s growth rate has remained above 8 percent and inflation has remained below 1 percent, despite bad conditions like US tariffs and geopolitical changes. The Governor also made it clear that going forward the pace of growth will slow down and inflation will increase and reach closer to the RBI target of 4 percent.
RBI decisions had bad impact on banks
Amid concerns over low GDP growth at current prices, Malhotra said the Reserve Bank of India’s actions are decided on the basis of real GDP, which is arrived at after subtracting inflation. Actual inflation figures were much lower than RBI’s estimates, raising some questions about the central bank’s forecasting ability. The RBI move came as a shock to banks due to clear expectations of rate cut and fall in borrowing costs. Banks were adversely affected by decline in net interest margin (NIM) and decline in core income. Sanjay Malhotra’s emphasis on customer sensitivity and speedy resolution of complaints is reflected in many of his speeches and remarks.
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