Reserve Bank of India (RBI) governor Sanjay Malhotra has raised concerns over India’s economic growth prospects amid rising global trade tensions and domestic regulatory adjustments, while reiterating the central bank’s cautious stance on interest rates and financial sector practices.

Speaking at a recent media interaction, Malhotra highlighted that India’s growth outlook could face moderate headwinds due to escalating tariff tensions across the globe. Although the Indian economy has demonstrated resilience in recent quarters, the Governor warned that prolonged trade uncertainty and protectionist tendencies could weigh on exports and manufacturing sentiment.

“We remain watchful of global developments. Trade barriers, if prolonged, could have a ripple effect on India’s economic momentum,” Malhotra noted, suggesting that the central bank is closely monitoring macroeconomic signals before making any shifts in its monetary stance.

In terms of interest rates, the RBI chief signalled a continuation of the status quo or a potential cut, depending on evolving inflation dynamics and growth patterns. “We are not in a hurry to raise rates. If anything, we are open to a cut if conditions so warrant,” he stated, underscoring the RBI’s commitment to balancing price stability with growth.

This calibrated approach comes at a time when inflation remains within the RBI’s comfort zone, but concerns persist over the sustainability of rural demand and private consumption.

Governor Malhotra also voiced concern over banks allegedly mis-selling insurance products to unsuspecting customers, calling it a serious breach of trust that requires immediate corrective action. “We have taken note of the rising instances of forced or mis-sold insurance by banks. This is a matter we are actively investigating, and appropriate regulatory steps will follow,” he affirmed.

The central bank’s remarks follow multiple complaints and reports indicating that customers are often pushed into buying insurance policies without fully understanding the terms or having given informed consent.

Meanwhile, the government’s proposed involvement in the new Payments Regulatory Board has stirred a fresh debate around the autonomy of India’s financial regulatory framework. Under the amended framework, the government will have a significant say in the oversight of digital payment systems — a domain that had thus far remained largely under the RBI’s purview.

While the move is aimed at enhancing coordination and efficiency in regulating the fast-evolving payments landscape, it has also triggered concerns over potential regulatory overlap and erosion of central bank independence.

The RBI has yet to formally comment on the development, but experts suggest that a clear demarcation of roles between the government and the central bank will be vital to ensuring seamless oversight and public trust.