Sanjay Malhotra, the 26th Governor of the Reserve Bank of India (RBI), assumed office on December 11, 2024, succeeding Shaktikanta Das. A seasoned bureaucrat with over three decades of experience, Malhotra’s appointment marks a pivotal moment for India’s economy, grappling with slowing growth and persistent inflation.
Sanjay Malhotra: Architect of India’s Monetary Policy as RBI Governor in 2025
Born on February 14, 1968, in Bikaner, Rajasthan, Malhotra’s journey from a computer science graduate to the helm of India’s central bank reflects his intellectual rigor and policy expertise.
As RBI governor, he has introduced bold measures, such as cutting the repo rate to 6% in April 2025, while fostering financial inclusion for cooperative banks and Regional Rural Banks (RRBs).
This article explores Malhotra’s background, career, and transformative role in shaping India’s financial landscape.
Early Life and Education
Malhotra’s formative years in Bikaner shaped his disciplined approach. The son of a Border Security Force officer, he attended Kendriya Vidyalaya, Bikaner, excelling academically.
- He graduated with a Bachelor of Technology in Computer Science from the Indian Institute of Technology (IIT) Kanpur in 1989, an institution ranked fourth in India’s NIRF 2024 engineering category.
- His technical foundation was complemented by a Master’s in Public Policy from Princeton University, equipping him with global perspectives on governance.
This blend of technical and policy expertise set the stage for his illustrious career, enabling him to navigate complex economic challenges with data-driven precision.
Career Beginnings and Rise in Bureaucracy
Malhotra joined the Indian Administrative Service (IAS) in 1990, Rajasthan cadre, after clearing the UPSC Civil Services Examination.
- His early roles in Rajasthan spanned mines, energy, and commercial taxation, showcasing his versatility.
- By 2000, he served as Private Secretary to a Union Minister, gaining central government exposure.
- As Principal Secretary (Energy) in Rajasthan, Malhotra pioneered public-private partnerships in power distribution and metering innovations.
- His tenure as Additional Secretary in the Ministry of Power included reforms in transmission and privatization of union territory utilities.
These experiences honed his ability to implement large-scale reforms, a skill critical to his later financial roles.
Key Roles in Finance and Taxation
In February 2022, Malhotra was appointed Secretary of Financial Services in the Ministry of Finance, overseeing public sector banks and insurance.
His most notable achievement was steering the Life Insurance Corporation (LIC) IPO, India’s largest, raising ₹21,000 crore.
As Revenue Secretary from October 2022, he rationalized capital gains tax, enhanced tax collection efficiency, and served as ex-officio GST Council Secretary, balancing state and national fiscal priorities.
Malhotra’s data-driven approach, including predictive tax revenue models, earned him accolades, though critics noted his cautious stance on contentious issues like online gaming taxation.
His tenure strengthened India’s fiscal framework, positioning him as a natural choice for RBI governor.
Appointment as RBI Governor
On December 9, 2024, the Appointments Committee of the Cabinet named Malhotra the 26th RBI governor for a three-year term, effective December 11.
His selection, a surprise to some, reflected the government’s preference for bureaucrats over economists, ensuring fiscal-monetary coordination.
Malhotra’s close rapport with Finance Minister Nirmala Sitharaman facilitated this alignment, though some analysts questioned whether it might compromise RBI autonomy.
Succeeding Shaktikanta Das, who stabilized markets post-COVID, Malhotra inherited an economy with 5.4% GDP growth (July–September 2024) and 6.2% inflation (November 2024).
His appointment, the first direct Finance Ministry transition since Duvvuri Subbarao, signaled continuity with a growth-oriented tilt.
Monetary Policy Under Malhotra
Malhotra’s tenure began cautiously, maintaining the repo rate at 6.5% in December 2024 while cutting the Cash Reserve Ratio (CRR) by 50 basis points to 4%, injecting liquidity into banks.
In February 2025, he reduced the repo rate by 25 basis points to 6.25%, followed by another cut to 6% in April, adopting an “accommodative” stance to counter global trade risks, including U.S. tariffs.
These moves, announced at Monetary Policy Committee (MPC) meetings, aimed to lower borrowing costs, benefiting cooperative banks and RRBs serving rural borrowers. Analysts praised his liquidity focus, urging banks to pass on benefits, though some criticized the slow transmission to depositors, especially senior citizens.
Support for Cooperative and Rural Banking
Malhotra’s policies have bolstered cooperative banks and RRBs, aligning with your interest in these sectors.
In March 2025, he permitted Urban Cooperative Banks (UCBs) to open up to five branches annually without prior approval, enhancing their reach in semi-urban areas.
His oversight supported RRB mergers, like Odisha Grameen Bank, streamlining rural credit delivery. Malhotra’s emphasis on digital banking has encouraged RRBs like Kerala Grameen Bank to launch online Kisan Credit Card platforms.
By ensuring NABARD refinancing, he has strengthened cooperative banks’ lending capacity for agriculture and SHGs, reinforcing financial inclusion. However, challenges like UCBs’ limited capital persist, requiring further reforms.
Digital and Financial Innovations
Malhotra has prioritized financial innovation, introducing exclusive domain names (‘bank.in’ for banks, ‘fin.in’ for NBFCs) to enhance cybersecurity.
- He criticized banks for not leveraging central databases, causing customer inconvenience, and pushed for efficient cross-border payments.
- His tenure as Revenue Secretary saw cryptocurrency platforms register with the Financial Intelligence Unit, clashing with RBI’s crypto ban stance under Das.
- Malhotra’s pragmatic approach seeks to regulate digital assets, balancing innovation with stability.
His leadership in the Financial Action Task Force evaluation earned India favorable ratings, boosting global confidence in its financial system.
Challenges and Criticisms
Malhotra faces a delicate balancing act. Inflation, at 6.2% in November 2024, exceeds the RBI’s 4% target, while GDP growth lags at 6.6% for FY25. Critics argue his rate cuts prioritize growth over price stability, risking further inflation.
The rupee’s weakening post-appointment has raised concerns, though Malhotra appears to favor natural currency fluctuations. Some question his bureaucratic background, suggesting an economist might better navigate global uncertainties.
His close government ties, while fostering coordination, spark fears of reduced RBI independence, Cooperative banks’ technological gaps and governance issues also demand his attention.
Leadership Style and Reputation
Described as a “hard taskmaster” with a “memory of an elephant,” Malhotra is known for daily reviews and micro-level focus. Colleagues praise his calm influence and consensus-building, evident in GST Council negotiations.
He avoids overstepping, focusing on data-driven decisions, as seen in his tax revenue models.
His cordial relationship with Sitharaman ensures policy alignment, but Malhotra must prove he can assert RBI’s autonomy amid government pressure for rate cuts.
Impact and Future Outlook
Malhotra’s tenure is poised to shape India’s economic trajectory. His rate cuts and liquidity measures have spurred lending, particularly for cooperative banks and RRBs, supporting rural economies.
The February 2025 MPC meeting post-Budget 2025-26 will test his ability to balance growth and inflation. Strengthening UCBs and RRBs through digital adoption and capital infusion remains critical.
Malhotra’s vision for a tech-driven, inclusive financial system could position India as a global leader, but he must address structural banking challenges and global risks like trade wars.His data-centric, collaborative approach offers hope, yet bold reforms are needed to sustain momentum.
Look Ahead for the RBI Governor Sanjay Malhotra
Sanjay Malhotra’s ascent to RBI governor reflects his remarkable journey from Bikaner to Mint Street.
His technical expertise, policy acumen, and 33-year career equip him to navigate India’s economic challenges. By cutting rates, boosting liquidity, and supporting cooperative and rural banking, Malhotra is reshaping India’s financial landscape.
However, inflation, growth slowdown, and RBI autonomy concerns loom large. As he steers the central bank, Malhotra’s ability to balance government expectations with independent policymaking will define his legacy.
For cooperative banks and RRBs, his policies promise growth, but their success hinges on addressing systemic weaknesses. Malhotra’s tenure is a test of resilience and reform in a turbulent global economy.
