RBI Governor Sanjay Malhotra concluded the monetary policy address with major reforms, including a proposed framework for derivatives on corporate bond indices, finalized regulations for External Commercial Borrowings (ECBs), and removal of the ₹2.5 trillion cap under the Voluntary Retention Route (VRR). He also announced operational relaxations for NBFCs, citing benign inflation and strong growth.
The Reserve Bank of India (RBI) has announced a series of forward-looking measures to strengthen India’s financial ecosystem. Governor Sanjay Malhotra proposed a framework for derivatives on corporate bond indices, aimed at deepening capital markets and enhancing risk management tools for investors.
Regulations for External Commercial Borrowings (ECBs) have been finalized, providing clarity and stability for corporates seeking overseas funding. In a significant move, the RBI will remove the ₹2.5 trillion limit under the Voluntary Retention Route (VRR), expanding opportunities for foreign portfolio investors in debt markets.
For Non-Banking Financial Companies (NBFCs), the RBI proposes to dispense with the requirement of opening over 1,000 branches for certain categories, easing operational burdens. Malhotra emphasized that benign inflation provides leeway to remain growth supportive, while India’s economy continues to register high growth momentum.
Key Highlights
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Corporate bond markets: Framework for derivatives on bond indices proposed.
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ECB regulations: Finalized for greater clarity and stability.
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VRR cap removed: ₹2.5 trillion limit lifted to attract foreign investors.
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NBFC reforms: Branch-opening requirement eased for select firms.
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Macro outlook: Benign inflation, strong growth trajectory.
Sources: ANI, Business Standard, Mint, Economic Times