The Reserve Bank Governor stated that the Monetary Policy Committee (MPC) will conduct a reassessment of growth and inflation dynamics at its meeting next month. This is due to the rise in crude oil prices caused by the ongoing crisis in the Middle East.
In an interview with CNBC-TV18, Governor Sanjay Malhotra also mentioned that about fifty percent of foreign currency non-resident deposits (FCNR(B)), attracted through the foreign exchange swap mechanism, have a five-year maturity. The total inflow from these deposits under the recent RBI swap mechanism amounted to USD 127.22 billion.
Regarding inflation, Malhotra noted that the increase in crude oil prices will have an impact, but the extent of this impact will depend on how much these costs are passed on to consumers. He emphasized that the rise in oil prices increased from $82 billion for the Indian basket in July to $90 billion in August, which will undoubtedly have an effect, but this again depends on the cost pass-through mechanism.
In the governor's view, the government has largely absorbed and mitigated this shock, allowing the Indian economy to successfully navigate this situation. Furthermore, the Reserve Bank of India (RBI) Governor stated that he will continue to monitor inflation sustainability, inflation expectations, and its aggregate.
He added: 'Risks exist on both sides... the MPC will reassess the growth and inflation dynamics when it meets in about a month. I will not give my own assessment.' The next meeting of the RBI Monetary Policy Panel is scheduled for October 5 to 7, 2026.
Concerning FCNR(B) deposits, the governor noted that the flows were 'very stable' and reflect strong global investor confidence in India's extremely robust macroeconomic fundamentals. He added that this demonstrates the ability to attract foreign and capital flows in a short period, which contributes to financial stability and external sector resilience, and they are pleased with the result.
Malhotra also reported that the strong inflows helped stabilize currency markets by providing liquidity and improving sentiment. He specified that FCNR(B) deposits are predominantly concentrated in the five-year tenure, accounting for almost half of the entire portfolio (approximately 48.50–50 percent). The next largest segment, comprising about 42 percent, is in the three-to-four-year maturity range, and the remaining share, about 9 percent, is within the 4–5 year window.
The governor also stated that the Reserve Bank possesses sufficient tools to manage the current excess liquidity in the banking system and is ready to use them as needed. He added that some liquidity will dissipate naturally over time.