Most measures required for India’s inclusion in global bond indices had already been completed, while some investor-friendly steps aimed at easing investments were either being implemented or would be rolled out in the coming weeks, Reserve Bank of India (RBI) Governor Sanjay Malhotra said on Wednesday.
“Whatever was to be done has been already done. Some ease-of-investing measures are in the pipeline and most of them have either been completed or will be done in a few days to a few weeks,” Malhotra said in an interview with ET Now.
India remains hopeful of securing inclusion in Bloomberg’s Aggregate Bond Index after domestic sovereign bonds were included in JPMorgan’s emerging market debt index in 2024.
On India’s external position, Malhotra said the economy was in a much stronger position than during the 2013 taper tantrum. The current account deficit stood at around 0.6 per cent in the previous financial year compared with nearly 5 per cent in 2013, while foreign exchange reserves provide more than 10 months of import cover.
Foreign exchange reserves are equivalent to around 89 per cent of external debt and exceed the International Monetary Fund’s reserve adequacy metric, he said, adding that both the current account and capital account remained resilient.
Malhotra reiterated that the rupee remained market-determined and that the RBI intervened only to curb excessive volatility and ensure orderly market conditions.
On domestic growth, the governor said investment activity remained healthy despite global uncertainties, citing investments across defence, renewable energy, hospitality and shipbuilding sectors. Capacity utilisation levels remained high and financing conditions were supportive, with credit, equity capital and internal accruals available to support expansion, he said.
Addressing concerns over the migration of household savings to capital markets, Malhotra said the trend reflected healthy diversification. Deposit growth had improved to around 12 per cent and was not constraining credit growth, he said.
“It is credit which creates deposits,” Malhotra said, adding that lending capacity was constrained by capital and liquidity rather than aggregate deposit growth.
On reserve management, he said the RBI’s investment strategy was guided by safety, liquidity and returns. Gold holdings were primarily aimed at diversification and stability rather than generating returns from price movements.
Providing an update on the central bank digital currency (CBDC) project, Malhotra said the pilot had crossed one crore users and processed transactions worth around Rs 38,000 crore. The RBI would continue to work on interoperability, programmable CBDC use cases, and wholesale and cross-border applications, he said.