RBI’s Bold Moves: Strengthening Liquidity, AI Ethics, and Climate Risk Frameworks in FY26

Updated: May 29, 2025 11:39

Image Source: ET Government

The Reserve Bank of India (RBI) has unveiled a series of strategic initiatives aimed at fortifying the financial sector, enhancing liquidity management, and preparing for the future of digital currency. Here’s a breakdown of the key announcements:

Key Highlights

Liquidity Stress Tests: RBI will strengthen liquidity stress tests for commercial banks in FY26 to ensure financial stability.
Net Income Surge: RBI reported a net income of ₹2.69 trillion for FY25, marking a significant increase from ₹2.11 trillion in FY24.
AI in Finance: A framework for responsible and ethical AI adoption in the financial sector will be developed in FY26.
Climate Risk Guidelines: RBI will issue climate risk disclosure guidelines to enhance transparency and sustainability in financial operations.
Balance Sheet Growth: The central bank’s balance sheet expanded by 8.2%, reaching ₹76.25 trillion as of March 31, 2025.
Cross-Border CBDC Pilots: RBI is exploring bilateral and multilateral pilots for Central Bank Digital Currency (CBDC) in cross-border payments.
Expansion of CBDC Pilots: The ongoing pilots in e-retail and wholesale will be expanded with new use cases and features.
International Collaborations: RBI will finalize MoUs with global central banks, including Banque de France and the European Central Bank.
Liquidity Management: The central bank will deploy an appropriate mix of instruments to modulate liquidity effectively.
Banknotes in Circulation: The value and volume of banknotes in circulation increased by 6.0% and 5.6%, respectively, in 2024-25.
Economic Growth Outlook: RBI projects that India will remain the fastest-growing major economy in 2025-26.
Expenditure & Foreign Securities: Total expenditure rose to ₹697.14 billion, while interest income from foreign securities surged to ₹970.07 billion from ₹653.28 billion last year.