Monetary Policy and Inflation Outlook
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RBI Governor Sanjay Malhotra declared that India has “won the battle against inflation,” with CPI falling to a multi-year low, but emphasized that the “war continues”
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The central bank’s stance remains neutral, not indicative of a reversal in easing, and future rate cuts will depend on evolving growth and inflation data—not current figures
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Malhotra noted that the bar for further easing is now higher than before, reflecting cautious optimism
Liquidity Management and VRRR Auction
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RBI conducted a 7-day Variable Rate Reverse Repo (VRRR) auction on July 25, absorbing Rs 1.25 lakh crore from the banking system
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The auction received bids worth Rs 1.42 trillion, with a partial allotment of 73.6% at a cut-off rate of 5.49% and weighted average rate of 5.48%
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The move aims to realign short-term rates with the repo rate and manage surplus liquidity without disrupting durable flows
Governance and Regulatory Clarity
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Malhotra reaffirmed RBI’s commitment to preventing undue control by any single individual in bank management, justifying the 26% voting rights cap
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He ruled out any proposal to review this limit, citing the need for balanced governance
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Regulatory consolidation is underway to improve compliance and streamline oversight
Economic Transmission and Industry Support
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RBI sees increasing flow of funds to industry and the broader economy
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Malhotra dismissed concerns of asset bubbles and confirmed that monetary transmission is actively supporting growth
Sources: Business Standard, Economic Times, RBI Press Releases, Moneycontrol