RBI Governor Sanjay Malhotra Defends Economy Amid FPI Outflows

Reserve Bank of India Governor Sanjay Malhotra affirmed the resilience of the Indian economy during a post-Monetary Policy Committee press conference in Mumbai on August 5, 2026. Malhotra stated that strong economic fundamentals and a manageable Current Account Deficit provide structural buffers against external shocks, such as crude oil volatility and tensions in West Asia.

To bolster foreign inflows, the central bank is expanding the scope of sectors eligible for Foreign Portfolio Investment, including insurance, and simplifying related regulations. Malhotra attributed recent capital outflows to relative market valuations rather than domestic structural flaws.

In other updates, the Governor announced that plastic bank notes are undergoing testing and may be introduced by the start of the next financial year. Additionally, the RBI warned commercial banks against window dressing financial statements at the end of periods, directing strict adherence to regulatory guidelines.