Business
RBI Governor Says Rupee Depreciation Normal, Banking System Strong
New Delhi: Sanjay Malhotra has completed his first year as RBI Governor at a time when global volatility, tariff shocks and geopolitical tensions have tested financial systems everywhere. In an exclusive conversation with Zee Business Managing Editor Anil Singhvi, Malhotra discussed a wide array of topics, including interest-rate options ahead of the next MPC meeting, the rupee’s recent slide against the US dollar, the central bank’s gold reserves, foreign investment in banks, and the regulator’s broader priorities for financial stability. He said the RBI has navigated a difficult global backdrop with measured policy decisions and signalled that future rate cuts remain on the table depending on data and inflation trends.
Here are key excerpts from the interview:
Q1. How do you look back at your first year as RBI Governor?
Ans. The past year brought a series of external challenges from US tariff actions to the Russia–Ukraine conflict and tensions in West Asia. Despite this, it has been a satisfying year for both the RBI and the wider economy. We reduced the repo rate by 100 basis points, supported liquidity whenever required, strengthened supervisory frameworks and focused on customer service. Inflation moved back inside the 2–6 per cent band and GDP growth reached 7.8 per cent in the June quarter. Banks and NBFCs became stronger, and 2.75 lakh customer-service camps were held nationwide. Overall, it has been a demanding but successful year.
Q2. Is the RBI prepared to cut interest rates in upcoming policy meetings?
Ans. Our mandate is clear: keep inflation under control and support growth. We do not take either an overly aggressive or overly defensive stance. As we had indicated in the October MPC, the direction for rate cuts is positive, but the actual decision will depend entirely on incoming data and deliberations in the next MPC meetings.
Q3. Does India need to increase its gold reserves further?
Ans. Over the past eight years, the RBI has added nearly 300 tonnes of gold. Our total holding is now around 880 tonnes, roughly 15 per cent of our forex reserves. Decisions on further purchases are highly sensitive, but India’s gold and foreign-exchange buffers are strong and stable.
Q4. The rupee has touched life lows. Is this concerning?
Ans. The rupee’s long-term trajectory is guided mainly by inflation differentials. A mild depreciation over time is natural. Historically, the rupee has weakened around 3 per cent a year. The RBI does not defend any specific level but ensures volatility stays contained so that businesses can plan without uncertainty.
Q5. Personal and unsecured loans are rising quickly. Is this a worry?
Ans. Asset quality remains satisfactory and the banking system is not facing systemic risk. Borrowers must, however, remain disciplined and repay loans on time. The MSME segment always requires monitoring but is stable at present. We continue to track this space closely.
Q6. Foreign investment in Indian banks is rising. Is the RBI comfortable with this?
Ans. Yes. Foreign ownership in the Indian banking system is still below 7 per cent — well under the 15 per cent limit. We encourage foreign participation but have safeguards to prevent excessive influence. The trend is positive and not a cause for concern.
Q7. Can an Indian commercial bank feature among the world’s top 10 lenders?
Ans. Certainly. The government is focused on banking-sector strength and the RBI is working towards building large, competitive and globally relevant banks. With India’s economic expansion, that milestone is very achievable.
Q8. How is the RBI using artificial intelligence in the financial system?
Ans. The RBI is already a front-runner globally in adopting AI. We use it to strengthen cybersecurity, improve fraud detection, enhance credit-risk assessment and analyse large data flows. Banks too are being encouraged to adopt AI safely to improve service quality and risk management.
Q9. How is India safeguarding its economy amid global weakness?
Ans. India’s current account deficit was only 0.6 per cent last year. It may rise slightly due to recent tariffs, but remains well within control. Our forex reserves are around USD 700 billion and the banking system is strong. India’s digital payments infrastructure is among the fastest globally. These fundamentals cushion us against global volatility.
Read More: Will RBI cut rate in the next policy? Governor Sanjay Malhotra in conversation with Anil Singhvi
Q10. What role will the RBI play as India moves towards a USD 5-trillion economy?
Ans. Our job is to make sure the economy has a stable foundation to grow on. India can reach the USD 5-trillion mark only if its financial system remains strong through that journey. That means keeping banks and NBFCs well-capitalised, maintaining financial stability and ensuring that services — from basic savings accounts to large corporate lending — work smoothly for every user. RBI’s focus over the next two years will be simple but critical: keep the system safe, keep growth steady and make day-to-day banking easier and more reliable for 140 crore Indians. A resilient financial sector is the backbone of long-term growth. Our effort is to strengthen that backbone every single day.
Q11. What message would you give borrowers and consumers?
Ans. Those who take loans must repay responsibly. Protecting customer data is a top priority for the RBI. We will continue to work on improving service standards across banks and financial institutions.
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Business
IMF Raises India’s 2025 Growth To 7.3%
Washington: The International Monetary Fund on Monday raised India’s economic growth projection for 2025 by a sharp 0.7 percentage point to 7.3 per cent, citing stronger-than-expected performance in the second half of the year, even as it expects growth to moderate in the coming years.
In its World Economic Outlook Update, the IMF said the upward revision reflects a “better-than-expected outturn in the third quarter of the year and strong momentum in the fourth quarter,” underscoring India’s position as one of the fastest-growing major economies in the world.
The IMF projected that India’s growth would ease to 6.4 per cent in 2026 and 2027 as cyclical and temporary factors wane.
Despite the expected moderation, India remains a key driver of growth among emerging market and developing economies, which the IMF said are projected to expand at just over 4 per cent in 2026 and 2027.
Emerging and developing Asia continues to benefit from strong technology-related investment and trade, even as global momentum becomes uneven.
The update noted that global growth is projected to hold steady at 3.3 per cent in 2026, supported by easing trade tensions, accommodative financial conditions and a surge in investment linked to technology, particularly artificial intelligence.
Inflation trends were also favourable for India. The IMF said inflation in India “is expected to go back to near target levels after a marked decline in 2025, driven by subdued food prices,” offering additional support to domestic demand.
However, the IMF cautioned that risks to the outlook remain tilted to the downside. A reassessment of expectations around AI-driven productivity gains could lead to a pullback in investment and tighter global financial conditions, with spillover effects for emerging economies.
On the upside, the Fund said faster adoption of artificial intelligence could lift global growth, provided productivity gains materialise, and financial risks are contained.
Business
Why the US is buying icebreakers from Finland
Adrienne MurrayBusiness reporter, Helsinki
Aker Arctic TechnologyAs President Donald Trump continues to insist that the US needs to own Greenland, his wider focus on the Arctic region has seen Washington order new icebreakers.
For these ships, which can sail through seas covered in solid ice, the US has gone to the world expert – Finland.
Temperatures are sub-zero inside Aker Arctic Technology’s ice laboratory, as the scale model of an icebreaker cruises down a 70m-long simulation tank.
It ploughs a neat channel through the frozen surface of the water.
Undergoing testing at a facility in Helsinki, Finland’s capital, this is a design for the next generation of the country’s icebreakers.
“It’s crucial that it has sufficient structural strength and engine power,” says ice performance engineer, Riikka Matala.
Mika Hovilainen, the firm’s chief executive, adds that the shape of the vessel is also crucial. “You have to have a hull form that breaks ice by bending it downwards,” he says. “It’s not cutting, it’s not slicing.”
Finland is the undisputed world leader when it comes to icebreakers. Finnish companies have designed 80% of all those currently in operation, and 60% were built at shipyards in Finland.
The country leads the way out of necessity, explains Maunu Visuri, president and chief executive of Finnish state-owned company Arctia, which operates a fleet of eight icebreakers.
“Finland is the only country in the world where all the harbours may freeze during wintertime,” he says, adding that 97% of all goods to the country are imported by sea.
During the coldest months, icebreakers keep Finland’s ports open, and work as pathfinders for big cargo ships. “It’s really a necessity for Finland. We say that Finland is an island.”
It was this expertise that saw Trump announce in October that the US planned to order four icebreakers from Finland for the US Coast Guard.
A further seven of the vessels, which the US is calling “Arctic Security Cutters”, are to be built in the US, using Finnish designs and expertise.
“We’re buying the finest icebreakers in the world, and Finland is known for making them,” said Trump.
Adrienne MurrayUnder US law, the country’s naval and coastguard ships must be domestically-built, but in this case the president waived that requirement on national security grounds. He cited “aggressive military posturing, and economic encroachment by foreign adversaries”, by which he means Russia and China.
This US concern comes as climate change continues to make the Arctic Ocean more navigable for cargo ships, at least if icebreakers lead the way by cutting a path. This opens up commercial trade routes from Asia to Europe, either above Russia, or north of Alaska and Canada’s mainland, and down past Greenland.
Reduced ice levels also mean that oil and gas fields beneath the Arctic are more accessible.
“There’s simply a lot more traffic in that part of the world now,” notes Peter Rybski, a retired US Navy officer and Helsinki-based, Arctic expert.
“You have an active oil and gas exploration and extraction industry in Russia, as well as a newly-emerging trans-shipment route from Europe to Asia.”
Rauma Marine ConstructionsFollowing Trump’s outline announcement last autumn, the first contracts were awarded on 29 December.
Finland’s Rauma Marine Constructions is to build two icebreakers for the US Coast Guard at its shipyard in the Finnish port of Rauma. The first ship is due to be delivered in 2028.
A further four will be constructed in Louisiana, with all six using an Aker Arctic Technology diesel-electric powered design.
The US orders are part of an effort to catch up with the number of Russian icebreakers. Currently Russia has around 40, including eight that are nuclear powered.
By contrast, the US presently only has three in operation.
Meanwhile China operates around five polar-capable vessels. “None of them are technically icebreakers,” says Rybski, pointing to their design not meeting the strict criteria. “But they are increasing their fleet.”
He adds that China has increasingly been sending these “research” ships into Arctic waters between Alaska and the far east of Russia, including areas that the US considers its “exclusive economic zone”.
“With limited means to respond this becomes a problem [for the US].”
Trump’s desire to enlarge its icebreaker fleet goes beyond the practicalities of operating in ice-clad Arctic seas, assesses Lin Mortensgaard, a researcher at the Danish Institute of International Studies. She says it is also about projecting power.
“No matter how many aircraft carriers you have and how much you use them to threaten states with, you cannot sail your aircraft carrier into the central Arctic Ocean,” she says.
“Icebreakers are really the only kind of naval vessel to signal that you are an Arctic state, with Arctic capabilities. And I think this is what much of the US discourse is about.”
James BrooksBack in Finland, Helsinki Shipyard occupies a dock on the capital’s waterfront. It is where half of the world’s icebreakers have been made. Today owned by Canadian firm Davie, it also hopes to win new contracts from the US Coast Guard.
“The geopolitical situation has changed definitely,” says the shipyard’s managing director, Kim Salmi.
“We have our eastern neighbour here [Russia]. They are building their own [new] fleet. And the Chinese are building their fleet.”
He adds: “The US, Canada and the western allies in general, are looking for the power balance.”
Inside a cavernous shipbuilding hangar, workers cut and weld steel for the yard’s latest icebreaker, a heavy-duty Arctic vessel, called Polarmax that’s destined for the Canadian coastguard.
The Finns can build these complex vessels remarkably swiftly – it takes between two-and-a-half and three years – thanks to a streamlined production method, and decades of experience.
“Over 100 years, we have practised this,” says Arctia’s Visuri. “You’ve got this cycle of designers, operators, builders. That’s why Finland is the superpower of icebreakers.”
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