Open door, open mind: How Sanjay Malhotra quietly liberalised RBI in his first year

Subscribe to enjoy similar stories. When Sanjay Malhotra walked into Mint Street a year ago, few expected him to move as quickly and as boldly as he did to reform one of the country’s most tightly controlled sectors. Twelve months on, bankers believe the Reserve Bank of India (RBI) suddenly feels more open and accessible, and far more willing to rethink old rules.

In his first year as RBI governor, Malhotra has presided over some of the most consequential and liberalising shifts in Indian banking regulation in nearly a decade. Bankers and market experts described him as “one of the most open governors" the financial sector has seen – a technocrat who is willing to listen, debate, re-think and, most importantly, trust institutions to govern themselves provided they strengthen their supervision. Most described him as a highly accessible governor.

“This governor is open to talk… people are able to have access to him and give their views," said a senior banker, adding that this style has noticeably changed the mood among lenders. Since Malhotra took charge, the RBI’s monetary policy committee (MPC) has cut rates when it was widely expected to do so, and when it wasn’t. At his first such meeting in February, the rate-setting panel delivered a 25-basis-points (bps) cut.

Between February and December, MPC delivered a blockbuster 125-bps cut, signalling Malhotra’s willingness to act decisively to support growth. This has been one of the most aggressive easing cycles since 2019. In fact, he delivered a surprise cash reserve ratio cut of 100 bps in the June policy and sustained system liquidity, which markets read as the RBI doing whatever the market asked for, and a bit more.