RBI Governor Addresses Inflation Targeting and Bank Capital Adequacy

RBI Governor Sanjay Malhotra discussed inflation targeting amid CPI base year updates, noting changes aren't substantial enough for revising targets. He emphasized the importance of methodology updates in future projections and reassured the public that Indian banks have sufficient capital to meet evolving economic needs.

The Reserve Bank of India (RBI) Governor, Sanjay Malhotra, has clarified that while the Consumer Price Index (CPI) base year update involves significant methodological changes, these aren't substantial enough to warrant a revision of the current inflation targeting range. This assessment is currently under scrutiny.

Speaking post-Budget meeting, Malhotra emphasized that the RBI's upcoming projections will incorporate the new CPI base year and revised GDP methodologies, expected in the April monetary policy release. The RBI has already submitted its assessment to the government, pending a formal decision on potential target adjustments.

Addressing concerns about capital adequacy, Malhotra assured that Indian banks are well-capitalized to meet their own requirements and the credit demands of the economy. He cited a correlation between deposit and credit growth, acknowledging business cycles could lead to short-term discrepancies but stressed confidence in banking sector stability.

(With inputs from agencies.)