Tomorrow’s American Trade Land: RBI governor says he “will not find desire”

On Monday, the governor of Indian Reserve Bank, Sanjay Malhotra, indicated that the central bank may interfere in policy support if the US tariff begins by 50 % on Indian goods, which are scheduled to enter into local growth.

“If this happens, we will not find in our job,” said Malhotra in the annual banking domain at Ficci-IBA, stressing that RBI has already guaranteed sufficient liquidity in the banking system.

The escalation of the US tariff, described as a penalty for the ongoing imports of India from Russian crude, comes to the top of the current World Trade Organization duties. It is expected that the sectors including precious stones, jewelry, textiles, clothing, MSMES exports and shrimp are expected to have the largest burden of new drawings.

While reducing the broader economic repercussions, Malhotra confessed to risks. “We are at a critical turn,” he said. “The mobility in the volatile global circumstances, the increased uncertainty in trade, and the ongoing geopolitical tensions requires us to push the limits of growth.”

The RBI, which reduced the forecast of GDP of India in India to 6.5 % after announcing the first US tariff in April, has already reduced the Ribo policy rate by 100 basis points since February. The current rate remains unchanged at 5.5 % after reviewing the August policy.

Malhotra confirmed that the central bank did not lose growth while establishing inflation. He cited previous interventions, including price discounts during benign inflation periods, as evidence of RBI’s commitment to balance price stability and economic expansion.

On the organizational front, Malhotra announced that a draft guideline on credit risk and expected credit loss will be issued soon. RBI also plans to implement the BASEL-AII standards that cover the market, credit and operational risks by April 2027.

Since India loves its in place the third largest economy in the world, Malhotra has urged banks and large companies to “lead animal spirits” and stimulate a new investment cycle, especially at a time when public budgets are strong and the temporary warehouses remain strong.

He referred to the financial sector in India as a column of flexibility, noting that banks, NBFCs, and other entities organized by RBI provide 73 % of credit for the real economy-the bank alone represents 53 %. He said: “The banks are well drawn, with sufficient liquidity stores, the quality of strong assets and reasonable profitability.”

Malhotra also admitted the concerns of governance at the board of directors set by banks, promising reforms to free councils from routine issues and allowing more focus on strategic decisions. He said that RBI is to simplify credit delivery, reduce mediation cost, and improve the ease of doing business.