Archive · 6 Aug 2026
RBI Governor Says Liquidity Surplus Likely to Peak Around September
The Reserve Bank of India is like the country's money manager.
Its main job is to keep prices stable so things don't become too expensive too quickly.
The RBI's leader, Sanjay Malhotra, and his team spoke to reporters and explained their money decisions.
They said the current interest rate is just right for now.
They also said there is extra money in the banking system, but it will reach its highest point around September and then be used up.
The RBI watches how fast prices rise overall and wants inflation to reach 4%.
It is also testing new plastic-like notes called polymer notes that last longer.
If the tests go well, these notes could be used starting next financial year.
The RBI thinks the economy can grow by about 6.7% next year, and maybe even 7%.
It also wants banks to share the benefits of extra money with their customers.
RBI Governor Sanjay Malhotra and four deputy governors defended the current policy rate as appropriate amid evolving growth-inflation dynamics.
The liquidity surplus is likely to peak around September before being absorbed by currency demand, higher reserve requirements and maturing forwards.
The RBI reiterated that headline inflation, not core inflation, is its target, with a medium-term goal of bringing it to 4%.
Polymer notes are in a pilot phase and could enter circulation at the beginning of the next financial year if trials succeed.
FY27 growth is estimated at 6.7% with evenly balanced risks, leaving scope for 7% growth; monetary policy transmission is about 80 basis points.
- Who
- Reserve Bank of India (RBI) Governor Sanjay Malhotra, Deputy Governor Poonam Gupta and other RBI officials
- What
- Defended the RBI's monetary policy stance, saying the current rate is appropriate, the liquidity surplus will peak around September, and monetary policy transmission is largely complete
- When
- Wednesday
- Where
- India
- Why
- To explain the central bank's policy amid evolving growth-inflation dynamics, elevated headline inflation and emerging El Nino conditions
Concerns raised by reporters and analysts
RBI's official stance
Policy rate amid elevated inflation
Concerns raised by reporters and analysts
With headline inflation still elevated, some question whether the RBI should keep its stance unchanged and how comfortable it is with negative or very low real rates.
RBI's official stance
The RBI says the current rate is appropriate given growth-inflation dynamics, its framework targets headline inflation, and it will decide policy meeting by meeting without giving forward guidance.
Merchant discount rate (MDR) on digital payments
Concerns raised by reporters and analysts
If an MDR fee is levied on merchants following the Payments Act amendment, the cost could eventually be passed on to consumers.
RBI's official stance
The RBI says it is premature to comment as the amendments are still being worked on, and that consumers already bear such costs indirectly through the broader economy — someone has to pay for payment infrastructure.
- Institution
- Reserve Bank of India (RBI)
- Inflation target
- 4% headline inflation over the medium term
- Liquidity surplus peak
- Around September
- FY27 growth estimate
- 6.7%, with possibility of 7%
- Monetary policy transmission
- About 80 basis points; more or less complete
- Polymer notes
- Pilot ongoing; expected in circulation at start of next financial year
- El Nino
- Conditions have emerged; agriculture and allied activities showing resilience