RBI Governor addresses liquidity, government borrowing, and external sector strength
Reserve Bank of India Governor Sanjay Malhotra addressed a post-monetary policy press conference on February 6, 2026. He discussed the central bank's liquidity management strategy, government borrowing programs, and the country's strong external sector fundamentals.
RBI pledges ample liquidity for productive needs
Governor Sanjay Malhotra emphasized the Reserve Bank of India's duty to provide ample and sufficient liquidity to meet the productive needs of the economy.
This is crucial for ensuring effective monetary policy transmission across all markets, including overnight, money, government security, corporate, and credit markets.
The RBI utilizes various tools such as Open Market Operations (OMOs), Variable Rate Repos (VRRs), and Variable Rate Reverse Repos (VRRRs) to manage liquidity.
The immediate target is to maintain overnight liquidity at the policy repo rate, which has shown excellent transmission, particularly until December.
The RBI confirmed its commitment to proactively and pre-emptively providing liquidity, as demonstrated by actions taken even outside formal policy statements when required, ensuring continuous support for market functioning.
Robust external sector and manageable borrowing
Governor Malhotra addressed concerns about government borrowing, emphasizing net figures.
He noted the budgeted net borrowing for the coming year is ₹11.73 lakh crore, a marginal increase from the current year.
Deputy Governor T. Rabi Sankar added that planned switches of ₹2.5 lakh crore would further aid liquidity and yield curve management.
Malhotra also affirmed India's strong macroeconomic fundamentals, highlighting a very healthy external sector.
He cited a comfortable current account deficit of 0.8 percent of GDP in the first half of the year.
Proactive government measures, including trade deals and 100 percent FDI in the insurance sector, are expected to boost inflows.
The RBI expressed confidence in meeting external sector responsibilities, supported by sufficient reserves.
Confidence amidst market jitters
The press conference underscored the RBI's firm stance on liquidity and its confidence in India's macroeconomic resilience.
While market participants voiced immediate concerns over short-term rates and borrowing, the Governor's detailed explanations aimed to reassure.
This proactive communication is crucial for anchoring expectations and maintaining financial stability in a dynamic environment.