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Informist, Wednesday, Oct. 7, 2026

 

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--RBI Malhotra: Credit growth to stay strong 
--RBI Malhotra: See credit growth strong going forward 
--RBI Malhotra: Credit growth to stay strong, aid growth 
--RBI Malhotra: Seeing banks using FCNR(B) deposits to fund credit growth 
--RBI Swaminathan: Repo rate hike will moderate banks' credit growth 
--RBI Malhotra: Seeing banks using FCNR(B) deposits to fund credit growth 
--RBI Malhotra: Trust banks will use FCNR(B) deposits' liquidity prudently 
--RBI Malhotra: Trust banks will prudently utilise FCNR(B) deposits

 

MUMBAI – The Reserve Bank of India expects banks to prudently deploy the large pool of funds raised through foreign currency non-resident (bank) deposits and sees credit growth remaining strong, helping support economic growth. "We are already seeing the use of the FCNR (B) deposits as evidenced by the high growth rate," RBI Governor Malhotra said at the post policy press conference. However, he cautioned that banks should not deploy the funds too quickly, given the size of the inflows.

 

"We do not want them also, at the same time, to use them overnight. They need to do their due diligence properly and take their time to use these deposits," he said. Malhotra said banks had received FCNR(B) deposits of around $135 billion, calling the strong response a reflection of India's macroeconomic fundamentals. He said banks were expected to deploy the deposits prudently, particularly as credit growth remains robust.

 

"As you can see, 19% of the credit has increased. We need a lot of credit," Malhotra said, adding that the strong credit growth was helping meet unmet demand. On the broader credit outlook, Malhotra said credit growth was likely to remain strong despite the recent increase in the repo rate. "It will continue to be strong," he said, adding that it would "continue to support growth."

 

RBI Deputy Governor Swaminathan, meanwhile, said some moderation in credit growth was expected as the higher interest rates transmit through the banking system. Credit growth is currently around 18-19%, compared with a long-term sustainable average of 12-14%, Swaminathan said. "Some moderation will occur relating to demand as well as rate together," he said, adding that transmission typically takes a couple of quarters. However, moderation from current levels would still be adequate to support growth.

 

Malhotra said the RBI expects banks to use the FCNR(B) funds carefully rather than deploying the entire pool immediately, while the central bank expects surplus liquidity in the banking system to decline over time.   

 

The Reserve Bank of India's Monetary Policy Committee Wednesday raised the policy repo rate for the first time in over three years by 25 basis points to 5.50%. The MPC also decided to change its stance to calibrated tightening.  End

 

US$1 = INR 96.74

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Kabir Sharma

Edited by Akul Nishant Akhoury

 

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