RBI Monetary Policy Highlights: 2-6% Inflation Target Band Sacrosanct For RBI, Says Guv Malhotra

According to Tata Capital MD and CEO, Rajiv Sabharwal, "The RBI has acknowledged war related impact on the economy, and accordingly lowered GDP growth expectations. While we are monitoring the impact of the West Asia crisis on fuel prices and certain borrower segments, we believe the RBI’s assurance on liquidity support and stable interest rates should support overall market growth. Adequate system liquidity will go a long way to support credit growth and rates trajectory. We expect housing finance and retail business to continue growth momentum and be key growth drivers."

According to Rohan Khatau, Director, CCI Projects, “The RBI’s decision to hold the repo rate at 5.25% underscores the importance of preserving macroeconomic stability at a time when inflation is projected to rise to 5.1%. While factors such as a weakening rupee and elevated commodity prices could translate into higher construction costs, the continuation of a stable rate environment is positive for the real estate sector and helps sustain market confidence."

Khatua added, "In Mumbai, we continue to see steady demand in the premium and township segments, driven by infrastructure-led urban expansion, redevelopment activity, and a growing preference for larger, amenity-rich communities. Demand in these segments is largely anchored by long-term value creation and lifestyle considerations, making it relatively resilient to short-term economic fluctuations. These fundamentals remain intact and should continue to support steady absorption and investment activity even as the market navigates a more complex global backdrop."

RBI Monetary Policy Live: Central bank dusts off 2013 crisis playbook in 2026 - Here's how

RBI reached back into history for one of its most potent dollar-raising tools - the Foreign Currency Non-Resident (B) deposit scheme, last deployed by then-Governor Raghuram Rajan at the height of India's 2013 currency crisis. RBI announced that authorised dealer banks raising fresh FCNR(B) deposits of 3-5 year maturity will have their full hedging costs borne by the central bank, with the facility available until September 30, 2026.

The move echoes what Rajan did the day he took charge as RBI Governor in Sept. 2013. India was then in the grip of the 'Taper Tantrum'. The rupee had crashed to a then lifetime low of nearly Rs 69 per US dollar, capital was fleeing emerging markets, and dollar liquidity was precious. Rajan's response was to offer banks a special concessional swap window on FCNR(B) deposits, lowering the cost of mobilising NRI dollars.

Read More Here: RBI Dusts Off Raghuram Rajan's Taper Tantrum Crisis Playbook To Attract Dollar Inflows

RBI Monetary Policy Live: The central bank is fully prepared to address the AI led risks, said RBI Governor Sanjay Malhotra while concluding the post-policy press conference. India is yet to get access to Anthropic's Mythos platform. The deal is under consideration, added Guv Malhotra.

RBI Monetary Policy Live: RBI Guv Malhotra said the central bank has strong forex reserves in place. The central bank will come out of present shocks more resilient. The RBI will issue an updated list of upper layer NBFCs soon and any differential rate on deposits unacceptable. Guv also clarified that the RBI did not sell any gold; tonnage has improved a bit.

 RBI Monetary Policy Live: NDTV Profit's Piyush Shuka at RBI post-policy press conference:

When will the next NBFC upper-layer list be out?

RBI Governor Sanjay Malhotra hints at a timeline but avoids entity-specific concerns. @PiyushS_07 pic.twitter.com/Omum7AEvfB

— NDTV Profit (@NDTVProfitIndia) June 5, 2026

RBI Monetary Policy Live: The Reserve Bank of India on Friday announced a sweeping set of measures to attract foreign capital into the country, as net outflows from overseas portfolio investors touched US$ 13.7 billion in the current financial year and the rupee continues to face pressure from a risk-off global environment fuelled by the prolonged West Asia conflict.

Read More: RBI Unveils Five-Point Plan To Get Dollars Into The Country

Here is what the RBI has announced:

• G-Secs opened up for foreign investors
• Concessional forex swap for PSU ECBs
• RBI to bear full hedging cost on FCNR(B) deposits
• Wider equity access for overseas individuals
• Export proceeds window restored

RBI Monetary Policy Live: RBI Governor Sanjay Malhotra said the 2-6% inflation band target remains sacrosanct to the central bank. It is not advisable to take action on small deviations from tolerance band. He added that the rupee may not be over valued. ''The RBI will continue to be data dependent on policy rate decisions,'' said Guv Malhotra

RBI Monetary Policy Live: Commenting on FCNR (B) deposits, Guv Sanjay Malhotra Expect healthy flows from today’s measures. CRR, SLR dispensation is to be given for FCNR-B deposits. ECB incentives and FCNR schemes and G-sec reforms are expected to stabilise the rupee and improve investor sentiment. Authorised dealer banks raising fresh FCNR(B) deposits of 3–5-year maturity will have their full hedging costs borne by the RBI. 

RBI Monetary Policy Live: Read NDTV Profit's analysis on FCNR (B) announcements.

The central bank is dusting off a page from its 2013 crisis playbook when India was hit by the "Taper Tantrum". FCNR(B) deposits came to the rescue. The solution is back 13 years later:

RBI is dusting off a page from its 2013 crisis playbook.

Back then, India was hit by the "Taper Tantrum". The rupee crashed, capital fled emerging markets, and dollar liquidity became precious.

The solution? FCNR(B) deposits.

Now, 13 years later, the tool is back.

— NDTV Profit (@NDTVProfitIndia) June 5, 2026

RBI Monetary Policy Live: Commenting on policy verdict, Vipul Bhowar, Senior Director, Head of Equities at Waterfield Advisors said, "RBI is adopting a defensive stance in response to global supply shocks. While hawkish rhetoric without an accompanying rate hike provides a temporary respite for equity markets, it does not constitute an unequivocal endorsement of investment, particularly in highly rate-sensitive sectors such as real estate, automotive, and consumer discretionary goods.''

''Should inflation necessitate a rate increase later this year, these sectors are likely to experience pressure on both margins and demand. For investors, the current strategy emphasises capital preservation by focusing on high-quality equities with strong pricing power. This cautious approach is designed to navigate the prevailing geopolitical uncertainties until conditions stabilise,'' said Bhowar.

 RBI Monetary Policy Live: Former MPC member Ashima Goyal sheds light on tax relief provided to foreign investors on government securities. Listen in:

Former MPC member Ashima Goyal says tax relief on G-secs aims to deepen bond markets and attract stable, long-term foreign capital.

Adds equity measures may follow later, given current volatility concerns.@TamannaInamdar @niraj_shah @Heeraal pic.twitter.com/6ho1v96umz

— NDTV Profit (@NDTVProfitIndia) June 5, 2026

RBI Monetary Policy Live: Commenting on RBI's monetary policy, Ajit Mishra - SVP, Research, Religare Broking Ltd. said, "Today's RBI policy reflects a dual-track strategy of maintaining monetary stability while actively defending the rupee through targeted capital flow incentives. By holding the repo rate steady at 5.25% and retaining a neutral stance, the MPC has prioritised growth and inflation balance, even as it raised FY26 inflation projection to 5.1% and trimmed growth outlook to 6.6%.''

''The policy introduces decisive measures to attract foreign capital-scrapping capital gains tax for eligible foreign investors in government bonds, easing FPI access limits, and incentivising NRI dollar deposits while subsidising hedging costs. These steps, combined with concessional forex swaps, are aimed at reversing outflows and stabilising FX markets. For equities and debt markets, this is supportive of liquidity and inflows, while for the rupee, it signals a clear intent to anchor expectations and reduce volatility amid global oil shocks and sustained foreign selling pressure,'' said Mishra.

RBI Monetary Policy Live: FPI holding in general route at Rs 54,091 crore out of total Rs 64.78 lakh crore (0.83%)
- FPI holding in Fully Accessible Route (FAR) at Rs 3.21 lakh crore out of total Rs 47.63 lakh crore (6.74%).

Combined holding in both routes is at Rs 3.75 lakh crore out of total Rs 112.42 lakh Crore (3.34%)

Source: Govt FAQs

RBI Monetary Policy Live: Govt's FII ordinance effective from April 1, 2026.

FIIs are now exempted from capital gains tax on sale or transfer of government securities. LTCG tax on G-Secs cut from 12.5% to zero

#BREAKING: Govt issues Income Tax Amendment Ordinance, 2026; exempts FIIs from tax on interest earned from government securities.@Shrimichoudhary pic.twitter.com/AW42YXx9Qn

— NDTV Profit (@NDTVProfitIndia) June 5, 2026

RBI Monetary Policy Live: In a significant development, the government has scrapped long-term capital gains tax on investments made by foreign institutional investors (FIIs) in government securities through an Ordinance issued on Friday. The government has decided to remove the capital gains tax on G-secs to attract long-term, patient capital because these instruments have a longer tenure.

The decision comes at a time when foreign investors have pulled out a massive Rs 2.6 lakh crore from equities so far this year, which is way higher than Rs 1.66 lakh crore withdrawn in the entire 2025 because of geopolitical tension. In the first three days of June alone, foreign investors pulled out about Rs 34,000 crore from equities putting additional pressure on the rupee.

RBI Monetary Policy Live: RBI announces several measures to attract dollar inflows:

• All new issuances of 15-year, 30-year and 40-year government bonds will be a part of Fully Accessible Route

• Bonds under this category are part of three global indexes

• Limits on investment in other government securities will also be removed

• Limits for investments by Non-Resident Indians and Overseas Citizens of India are being increased, and extended to all individual persons residing outside India

• RBI will provide a facility of concessional forex swap for about four months till September 30

• RBI will also incentivise external commercial borrowings, by public sector undertakings

• RBI will allow a similar facility for bearing the full hedging cost till September 30 to banks for raising three to five year FCNRB deposits

• RBI will restore time for realisation for export proceeds to nine months

RBI Monetary Policy Live: RBI Governor Sanjay Malhotra said that a facility on concessional forex swap will be provided for four months. This will incentive ECBs by PSUs.

A similar facility forbearing full hedging cost will be provided till September

Forbearing full hedging cost till September for banks to raise 3-5 years FCNR-B deposits

RBI proposes to restore time for realisation of export proceeds to nine months

RBI Monetary Policy Live: For liquidity boost measures by RBI, Governor Sanjay Malhotra said:

• RBI will ensure appropriate liquidity in system
• Banks’ profitability saw some moderation vs last fiscal
• Surge in energy prices pose upside risks to India’s CAD
• Govt has few measures to announce foreign capital
• RBI will expand G-Secs universe under fully accessible route  
• This will include all new issuances of 15, 30, 40 year tenure G-Sec
• Till now G-Sec of only 10 year tenure were included
• Also, limits on short term investment by FPIs removed 
• Limits on concentration, individual securities on FPI investment under general route removed
• Govt provided tax benefits to G-Secs. All these measures to attract foreign capital
• Limits for investment by NRIs/OCIS in equity market will increase

RBI Monetary Policy Live: RBI Governor Sanjay Malhotra outlines capex, exports outlook

• Merchandise export showed growth despite conflict
• Pvt consumption aided by discretionary spending resilient
• Govt capex expected to remain robust
• Sustained credit flow by banks supportive of corporate investments
• Cost escalation may dampen investment sentiment
• Services export expected to remain resilient

RBI Monetary Policy Live: The CPI inflation for FY27 is now projected at 5.1%, which is a 50 bps jump from the central bank's previous forecast. MPC's inflation forecast has an upside bias. The risks of inflation are amplified, according to RBI Governor. G-sec yields are firmed up. Fuel inflation remained muted in March, April, while core inflation was stable at 3.7% in March-April, he noted.

RBI Monetary Policy Live: RBI Governor Sanjay Malhotra announced that the MPC now projects the real GDP growth projection for FY27 at 6.6% compared to 6.9% earlier. External factors post downside risks to growth outlook, according to Malhotra. High frequency indicators show domestic activity remained steady despite conflict.

The rise in energy price and supply disruption will weigh on economic activity. Malhotra explained that the RBI saw ''considerable risks'' in its assessment of both inflation and growth and will remain data-dependent while monitoring supply-side pressures.

RBI Monetary Policy Live: RBI Governor Sanjay Malhotra flags impact of Middle East conflcit:

• Supply chain disruption, energy prices reflected in lower growth and higher inflation
• CPI inflation remains low, baseline projection show inflation nearing upper band in Q3
• Outlook remains clouded due to sub-normal monsoon forecast and El Niño emergence

RBI Monetary Policy Live: The MPC decided to unanimously keep repo rate unchanged at 5.25%. The Standing Deposit Facility (SDF) rate was set at 5%, while the Marginal Standing Facility (MSF) rate and the bank rate stand at 5.5%, announced RBI Governor Sanjay Malhotra. 

RBI Monetary Policy Live: RBI Governor highlighted that the global economy shaped by heightened uncertainty, increased market volatility. Policymakers remain confident of withstanding shocks with minimum pain. The West Asia conflict spillovers is impacting economy, he said. Major central banks are expected to pivot towards towards tightening, according to the RBI Governor.

RBI Monetary Policy Live: RBI Governor Sanjay Malhotra has reached RBI headquarters to deliver the MPC address, starting soon at 10:00 am. Stay tuned to live updates!

Sanjay Malhotra, RBI Governer, arrives at RBI headquarters to announce MPC's decision on repo rate.

Stay tuned to NDTV Profit for more. pic.twitter.com/dKoflaXj37

— NDTV Profit (@NDTVProfitIndia) June 5, 2026

RBI Monetary Policy Live: All eyes on MPC as RBI Governor Sanjay Malhotra to unveil MPC verdict shortly. Tune in to his live address:

https://t.co/RNYZYJ7M1e

— ReserveBankOfIndia (@RBI) June 5, 2026

RBI Monetary Policy Live: RBI to revise GDP estimates?

Commenting on RBI policy expectations, Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments Ltd said, "There are some mild positive indications for the market today. There are signs of weakness in the AI trade in the US, South Korea and Taiwan and rotation away from tech stocks, but it is too early to say whether this will sustain.''

''The focus of the market today will be on the monetary policy and the message from the RBI Governor. The MPC is likely to hold rates with a guidance of a rate hike later in the year to combat inflation which is expected to rise in H2 FY27,'' said Dr. VK Vijayakumar.

RBI is likely to revise the GDP growth for FY27 downward and CPI inflation upward in the context of the energy shock and its implications. The most likely policy action is a 'hawkish hold', that is, the RBI would hold the rates without any change but would send a hawkish message that inflation is set to rise and, therefore, expect rate hike later this year.

''If the RBI decides to act now with a 25bp rate hike, that will move the banking stocks sharply upwards since they would benefit from rate hikes. However, a rate hike would be negative for interest elastic segments like automobiles and real estate,'' he added.

RBI Monetary Policy Live: Citi, Goldman Sachs and BofA expect the RBI Monetary Policy Committee to keep rates unchanged in the June policy meeting. Citi expects two 25-basis-point rate hikes in August and October and has raised its FY27 average inflation forecast to 4.9% from 4.6%. Goldman Sachs expects the MPC to retain its neutral stance, while BofA said a hold is likely for now despite arguments in favour of a rate hike.

 RBI Monetary Policy Live: Elara's Garima Kapoor decodes the road ahead for RBI policy

Pause today, hikes tomorrow?

With inflation building and global pressures rising, will RBI be forced to act sooner than expected?

Watch Garima Kapoor decode the road ahead.@Heeraal @niraj_shah pic.twitter.com/KMxZETJVMK

— NDTV Profit (@NDTVProfitIndia) June 5, 2026

RBI Monetary Policy Live: Speaking to NDTV Profit, Garima Kapoor of Elara Capital stated that she expects the RBI to hold interest rates and refrain from significant policy action today. She pointed out that India is currently facing a capital account problem and warned of a potential spike in inflation parameters during the second quarter. Looking ahead, Kapoor anticipates that the RBI will hike rates in the second half of the financial year, while also noting that the ongoing Middle East crisis could potentially reduce economic growth by 40 to 50 basis points.

RBI Monetary Policy Live: NDTV Profit reports live from RBI headquarters

#RBIPolicy | #RBI's six-member Monetary Policy Committee, led by Governor Sanjay Malhotra, will decide on the repo rate today.
Here's @PiyushS_07 with an overview of what we can expect pic.twitter.com/0HGyBolwJe

— NDTV Profit (@NDTVProfitIndia) June 5, 2026

RBI Monetary Policy Live: GIFT Nifty traded at 23,549, compared with Thursday's Nifty 50 close of 23,416.55. The futures contract was up 132.45 points from the previous close, indicating a higher start for Indian equities ahead of MPC verdict. 32 of 38 economists tracked by Bloomberg expect the repo rate to stay unchanged at 5.25%, while the rest expect a 25-basis-point rate hike.

RBI Monetary Policy Live: A recent spike in global crude oil prices, coupled with mounting tensions across West Asia, has introduced fresh uncertainty into the central bank's policy calculus. "As the situation (a reference to the Iran war) is still evolving, we expect RBI to maintain status quo in the upcoming policy," said SBI Research. RBI is unlikely to make significant policy moves in the near future, said Pranjul Bhandari, Chief India Economist at HSBC.

RBI Monetary Policy Live: The RBI's three-day monetary policy review will take place between June 3 and June 5. The outcome of the meeting, along with the central bank's stance on interest rates, will be announced by Governor Sanjay Malhotra at 10 a.m. IST on June 5. He will address reporters for a post-policy press conference afterwards. 

The RBI's monetary policy announcement will be streamed live across the central bank's official social media platforms. Viewers can also stay updated with real-time developments and key takeaways through the NDTV Profit's YouTube channel and other digital platforms.

RBI Monetary Policy Live: The Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) commenced its three-day deliberations earlier this week, with RBI Governor Sanjay Malhotra set to unveil the outcome on Friday, June 5. Economists broadly expect central bank's policymakers to leave the benchmark interest rates unchanged at 5.25% to weigh the impact on the economy amid the ongoing Middle-East geopolitical conflict.