Governor Sanjay Malhotra explains Reserve Bank’s role in India’s growth
April 21, 2026
RBI Governor Sanjay Malhotra, speaking at Princeton University, outlined the central bank's three core roles: price stability, financial stability, and developmental support. On the Iran War oil shock, Malhotra said the RBI is in "wait and watch mode," prioritising data-driven monetary decisions over aggressive demand compression amid rising inflation risks.
Further, the central bank is also the bank of banks and the banker and debt manager of the central and state governments. RBI touches upon almost all key aspects of India’s development agenda.
Sanjay Malhotra, Reserve Bank Governor, in his recent address at Princeton University in the United States, elaborated on how India’s central bank plays an active role in the country’s development.
RBI’s role in maintaining price Stability
Governor Sanjay Malhotra said the Reserve Bank’s first core function is price stability. He said that price stability is important for businesses and households to plan and invest confidently.
Talking about the current global petroleum crisis due to the Iran War, Governor Malhotra said that preventing this kind of entrenchment is where RBI’s monetary policy has a primary role to play through its influence on inflation expectations rather than through blunt demand compression.
“In such circumstances, our broad approach has been to be even more data dependent and to continuously reassess the balance of risks. We are therefore in wait and watch mode now,” RBI Governor said.
Financial stability a core responsibility
Governor Malhotra said that financial stability is the bedrock on which an economy prospers and grows sustainably. He said that the RBI’s pursuit of financial stability is reflected in its broader regulatory framework, which has been willing to sacrifice some short-term upside for long-term growth.
“When the global financial system came under stress, these measures gained significance. Indian banks came out of the crisis with relatively stronger balance sheets,” Malhotra said.
He said that the measures taken to improve India’s financial stability include the Asset Quality Review, launched in 2015; the Insolvency and Bankruptcy Code (IBC), launched in 2016; and governance reforms in Public Sector Banks.
Developmental Role
RBI Governor Malhotra said the central bank plays a key role in the government’s other major development projects. He said the bank has been an active and crucial partner in the government projects, such as the Jan Dhan program, UPI, Central Bank Digital Currency, and Unified Lending Interface.
Sanjay Malhotra, Reserve Bank Governor, in his recent address at Princeton University in the United States, elaborated on how India’s central bank plays an active role in the country’s development.
RBI’s role in maintaining price Stability
Governor Sanjay Malhotra said the Reserve Bank’s first core function is price stability. He said that price stability is important for businesses and households to plan and invest confidently.
Talking about the current global petroleum crisis due to the Iran War, Governor Malhotra said that preventing this kind of entrenchment is where RBI’s monetary policy has a primary role to play through its influence on inflation expectations rather than through blunt demand compression.
“In such circumstances, our broad approach has been to be even more data dependent and to continuously reassess the balance of risks. We are therefore in wait and watch mode now,” RBI Governor said.
Financial stability a core responsibility
Governor Malhotra said that financial stability is the bedrock on which an economy prospers and grows sustainably. He said that the RBI’s pursuit of financial stability is reflected in its broader regulatory framework, which has been willing to sacrifice some short-term upside for long-term growth.
“When the global financial system came under stress, these measures gained significance. Indian banks came out of the crisis with relatively stronger balance sheets,” Malhotra said.
He said that the measures taken to improve India’s financial stability include the Asset Quality Review, launched in 2015; the Insolvency and Bankruptcy Code (IBC), launched in 2016; and governance reforms in Public Sector Banks.
Developmental Role
RBI Governor Malhotra said the central bank plays a key role in the government’s other major development projects. He said the bank has been an active and crucial partner in the government projects, such as the Jan Dhan program, UPI, Central Bank Digital Currency, and Unified Lending Interface.