‘WILL DO EVERYTHING TO CURB SPECULATION’

RBI will do whatever is needed for orderly price discovery in forex. We have enough tools: governor Sanjay Malhotra

- Harsh Kumar, Subhana Shaikh & Satish John

On the 18th floor of the Reserve Bank of India’s (RBI) Mumbai office tower, governor Sanjay Malhotra is mindful of the legacy of the illustrious institution.

For the 26th governor, the choice between growth and inflation is crystal-clear: “For us, it’s always inflation,” Malhotra told Mint at his office, seated before a wall with framed photographs of his predecessors, from the first governor Sir Osborne Smith who took charge in 1935, to his immediate predecessor Shaktikanta Das, who left in December 2024. Malhotra asserted that the central bank will do “whatever is required” to ensure orderly price discovery in the forex market. In a wide-ranging interview, the governor touched upon India’s current account deficit, inflation, the trajectory of the rupee, and what keeps him awake at night. Edited excerpts:

The shareholder typically demands more. How do you view RBI’s ₹2.87 lakh crore dividend to the government? Does this meet expectations?

Generation of profits or surplus is not a goal for central banks. It should not be an indication of RBI’s performance. The objectives of a central bank are to maintain price stability and financial stability. Profits and surplus are by-products of our operations to meet these objectives. There is a framework, which has been decided by the (RBI) board, to ascertain the dividend or surplus. Members of the government are part of the board. So, their expectations are pretty much anchored.

Do you think it could help reduce government borrowing somewhat? The government’s market borrowing has been high and continues to rise.