India’s financial markets have demonstrated remarkable resilience amid global uncertainty, but the next phase of growth will depend on deepening liquidity, broadening participation, and strengthening market infrastructure, Reserve Bank of India Governor Sanjay Malhotra said in his keynote address at the 25th FIMMDA-PDAI Annual Conference in Amsterdam.
Speaking on the theme “Indian Financial Markets – Resilience and Resurgence,” Malhotra noted that the Indian economy has remained among the fastest-growing major economies since the pandemic, supported by strong macro fundamentals, structural reforms, and prudent policy management. The economy grew at an average of 8.2 per cent during 2021-25, with 7.6 per cent growth estimated for 2025-26 and 6.9 per cent projected for 2026-27.
Inflation has largely stayed within the RBI’s tolerance band, with headline CPI projected at 4.6 per cent for FY27, while fiscal consolidation is progressing through improved tax buoyancy and better quality of expenditure. The banking and NBFC sectors have strengthened balance sheets, and corporate bond issuances have broadened financing channels beyond bank credit. On the external front, foreign exchange reserves cover 11 months of imports, and gross FDI is expected to rise to about USD 90 billion in 2025-26.
Turning to financial markets, Malhotra highlighted several measures undertaken by the RBI to enhance efficiency and transparency. These include an agile liquidity management framework, extension of the benchmark issuance strategy to State Development Loans from FY27, and the introduction of total return swaps on corporate bonds and derivatives on corporate bond indices to aid credit risk management.
The RBI has also rolled out forward contracts on government securities, which are being increasingly used by long-term investors like insurers.
On market infrastructure, the RBI has expanded central clearing for FX forwards up to 36 months, introduced electronic trading platforms for forex options, and implemented initial margin regulations for non-centrally cleared derivatives.
