RBI examining measures to expand bank credit to productive sectors: Governor Sanjay Malhotra

Reserve Bank of India

The central bank is examining measures to expand bank credit towards productive sectors as well as reduce the cost of intermediation, Governor Sanjay Malhotra said on August 25 during an address at the FIBAC 2025 event in Mumbai.

The RBI Governor said another area of focus is the Micro, Small, and Medium Enterprises (MSME) sector which contributes significantly to employment, exports and output, where he cited a significant credit gap. Banks and NBFCs should make special efforts to boost formal credit to them, he said, adding that they should leverage the public digital infrastructure like the Unified Lending Interface (ULI) to achieve results. Governor Malhotra also said that lenders need to accelerate the adoption of ULI as they strive to enhance credit and reduce costs.

The central bank will continue to conduct its monetary policy with the objective of price stability and economic growth, he said. "We will continue to strengthen financial stability, this is our primary objective," the central bank governor added.

The governor also said the central bank will continue to strengthen financial stability of the country and review bank credit norms. "73 percent of credit needs are met by entities that are regulated by RBI," he said, adding that RBI is examining the measures taken by bank to enhance credit growth.

The governor also stressed the need to increase the numbers of services that banks’ business correspondents are providing. "Business correspondent is a very effective channel for providing services and this channel needs to be strengthened."