RBI MPC speech: FDI, forex reserves, credit growth — what Governor Sanjay Malhotra said on global financials

Governor Sanjay Malhotra highlighted stronger FDI inflows, $734.6 billion forex reserves and 18.1% bank credit growth, while noting $10.3 billion FPI outflows amid global financial risks.

The Reserve Bank of India (RBI) raised the repo rate by 25 basis points to 5.5% on Wednesday and changed its monetary policy stance to “calibrated tightening”, as the central bank assessed rising inflation risks and a challenging global environment. The Monetary Policy Committee kept its options open for either a further rate hike or a pause, depending on how economic conditions evolve.

Beyond the rate decision, RBI Governor Sanjay Malhotra's policy statement offered a detailed assessment of India's financial position. Foreign direct investment has strengthened, bank credit is growing at a faster pace and foreign exchange reserves remain high.

At the same time, foreign portfolio investors have continued to withdraw money from Indian markets amid global uncertainty, higher bond yields and elevated crude oil prices.

FDI inflows rise, but foreign portfolio investors remain cautious

India's net FDI inflows rose to $13.8 billion between April and August 2026, compared with $9.6 billion in the same period last year. The RBI said the improvement was driven by higher gross FDI inflows and slower outward FDI. Gross FDI grew 20.6% during the period.

The RBI also highlighted India's position in greenfield investments. India ranked third globally in announced greenfield FDI projects during April-August 2026, with projects worth $41.3 billion.

Portfolio flows, however, have been weaker. FPIs recorded net outflows of $10.3 billion between April and 5 October 2026. The RBI said measures announced in June had supported capital inflows and that the balance of payments was expected to remain in healthy surplus.

India's forex reserves remain a major buffer