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While making the monetary policy committee (MPC) announcements, RBI Governor Sanjay Malhotra announced that the new norms will not be implemented by March-end FY26.
He addressed concerns from banks that would have otherwise had to set aside additional funds to meet the requirements. He emphasised that the RBI will provide a phased rollout of the new LCR guidelines to avoid sudden financial stress.
“Less than two months is too short a window for banks; we will aim for March 31, 2026, but not all norms will kick in at the same time,” Malhotra stated.
Earlier, banks had expressed concerns over the tight deadline of March 31, 2025, arguing that it did not offer sufficient time to adjust to the new liquidity requirements.
Additionally, Malhotra addressed the central bank’s approach to liquidity management. He emphasised the RBI’s commitment to monitoring evolving liquidity and financial market conditions.
Malhotra stated, “We will continue to monitor evolving liquidity and financial market conditions and proactively take appropriate measures to ensure orderly liquidity conditions as required for the system.”
The Governor noted that some banks are hesitant to lend in the uncollateralised call money market, choosing instead to park funds with the RBI.
To address this, the RBI has implemented measures to inject liquidity into the banking system.
In addition to liquidity management, Governor Malhotra discussed the Indian rupee’s exchange rate. He affirmed that the rupee’s value is determined by market forces and that the RBI intervenes only to curb excessive and disruptive volatility.
