Seize the opportunity, invest boldly: RBI Guv Sanjay Malhotra

MUMBAI: Record low inflation, strong fiscal position and solid corporate balance sheets should lead the industry to invest boldly and "champion the entrepreneurial spirit," RBI governor Sanjay Malhotra said in his inaugural address at the Ficci-IBA banking conference. Banks must also push the "frontiers of growth and seize the opportunities" that are coming, he said.

Malhotra emphasised that there is no tussle between regulated entities trying to accelerate growth and the regulators focusing on stability.

"Financial stability and price stability do not inhibit growth. Far from it. They are essential for sustainable growth. I look forward to working together with the regulated entities, to improve the efficiency and effectiveness of our financial intermediation, to ensure that the due benefits reach the people of our nation," he said.

He said India Inc must also contribute by investing boldly. "I urge the industry and some of the leading lights present here to invest boldly and champion the enterprise entrepreneurial spirit that defines our nation at a time when the balance sheets of the banks and the corporates are at their best, they should come together," he said, adding that driving the animal spirits to create an investment cycle is important among global uncertainties.

He acknowledged that India is at a critical juncture, as the country navigates a choppy global economic environment characterised by heightened trade uncertainty and persisting geopolitical tensions. "We need to push the frontiers of growth. We all must step up our efforts to address the emerging challenges and at the same time seize the opportunities that are coming our way. Generations of freedom fighters gave us free India, a Swatantra Bharat. We need to now work for a Samridh Bharat, a prosperous India," Malhotra said.

He said the RBI will continue its consultative approach, reaching out to all stakeholders and the general public, seeking suggestions on regulations.

"We have not hesitated in relaxing a stringent rule once deemed necessary, if the context changes and the cost benefit balance reverses, what we do as a matter of practice has now been institutionalised," he said citing the examples of easing of regulations like in according flexibility for Urban Cooperative Banks (UCBs) in their operations, restoring risk weights for lending to NBFCs as risks abated and rationalisation of run-off factors, potentially improving liquidity coverage ratio for the banking system.