GS3The Hindu · Current Affairs
Inflation control remains RBI’s foremost priority, says Governor Sanjay Malhotra
RBI Governor Sanjay Malhotra says inflation control remains the RBI’s foremost priority even as the RBI steps aim to attract foreign capital.
SP
Samachar Pathshala Desk
Published 27 Jul 2026 · 1 min
Key takeaways
- FCNR(B) deposits are foreign-currency deposits by non-residents held with Indian banks; RBI rules guide who can hold them.
- RBI measures can raise questions about costs of hedging new FCNR(B) deposits and forex swaps for external commercial borrowings by public sector entities.
- RBI can manage liquidity effects of foreign inflows through its standard instruments, rather than being forced to accept liquidity as-is.
- RBI does not aim for a specific exchange-rate level; RBI intervention focuses on reducing excessive or disorderly volatility.
What happened: RBI Governor Sanjay Malhotra on inflation priority, foreign inflows, and rupee management
RBI Governor Sanjay Malhotra said inflation control remains the RBI’s foremost priority. In his remarks, he connected foreign capital inflows to investor response after RBI policy steps in June and explained how RBI tools can address liquidity consequences if inflows increase rupee liquidity in the domestic system.
Foreign capital: FCNR(B) deposits and foreign inflows into government securities
The UPSC angle
GS3GS3
Inflation-first MPC, foreign inflows, and rupee volatility management
UPSC may frame this as a trade-off question: how does the RBI keep <strong>price stability</strong> as the first priority under the Monetary Policy Committee (MPC) while responding to liquidity and exchange-rate pressures from foreign capital flows?
