Our primary objective is price stability: RBI governor Sanjay Malhotra

MUMBAI: RBI governor Sanjay Malhotraassured markets that the central bank would provide all the liquidity required to ensure that interest rates are passed on. In his first media interaction, he provided a peek into his thought process. Excerpts:
What gives you optimism about growth?
We analyse all parameters regularly, including high-frequency indicators.Whether one looks at agriculture – with good reservoir levels – or other sectors, my detailed assessments in the MPC (monetary policy committee) statement reflect a positive outlook. The recent Nielsen survey shows consumption growth at over 7%, which augurs well. Similarly, manufacturing activity is also picking up, as seen in the PMI. All these factors give us optimism.
Is growth a priority over inflation?
Unlike other countries with dual objective, RBI Act has given us a clear mandate – our primary objective is inflation and price stability, while keeping growth in view. We remain focused on meeting these objectives. Since inflation is coming down, we felt we could be more supportive of growth. However, we also maintain a neutral stance, allowing us to proactively respond to evolving macroeconomic conditions.
Will RBI be comfortable with inflation within the tolerance band (2-6%)?
When you appear for an exam, some may aspire to just pass. At RBI, we aim to be on top of everything.

On RBI’s decision to use cease-and-desist norms to discipline banks…
These measures are taken after great consideration and thorough thought, only after giving the entities an opportunity to comply. We do not wish to use them frequently – this is a measure of last resort, applied in the rarest of rare cases when all other options have failed. These actions are taken in the public interest, and we will continue this approach.
When do you expect the transmission of rates to deposits and the MCLR?
The revised rates will not affect those who have already invested, as existing deposit rates remain fixed for their tenure. The changes will apply only to new deposits. Efforts will be made to provide the necessary liquidity support for a smooth and timely transmission of these changes. Regarding the Marginal Cost of Funds-Based Lending Rate (MCLR), revisions typically occur on a six-month basis, and some adjustments can be expected in June.
Is RBI satisfied with the moderation in personal loan growth, or is further moderation needed?
The short answer is yes, we are satisfied, and I do not think further moderation is required.