Reserve Bank of India Governor Sanjay Malhotra outlined the central bank's policy achievements in 2025 and set priorities for 2026, emphasizing balanced interventions designed to maintain stability while supporting growth in a challenging global environment. In his year-end message to staff on December 31, Malhotra highlighted that policy measures were carefully calibrated against a backdrop of geopolitical uncertainties, uneven growth, and volatile financial markets.

New Year Priorities and Staff Guidance

Governor Malhotra asked RBI staff to persist with regulatory calibrations and sharpen supervision in the new year. In his annual message to staffers, he emphasized that customer centricity and financial inclusion "must remain at the heart" of the central bank's work.

"We must persist with strengthening the monetary policy framework, sharpening supervision, calibrating regulation, deepening financial markets, and improving payments and currency management," Malhotra said in the message.

The Governor noted that staff responsibilities will continue to expand in 2026, marked by a rapidly evolving economic and financial landscape shaped by technological change, geoeconomic shifts, and rising public expectations.

Regulatory Framework Overhaul

The RBI made significant strides in regulatory simplification during 2025, implementing a structured framework for regulation formulation. The central bank consolidated a substantial number of regulatory instructions, streamlining the compliance landscape for financial institutions.

Malhotra noted that these regulatory reforms strengthened the financial sector, enhanced credit flow, improved competitiveness and efficiency of regulated entities, and reinforced consumer centricity.

Monetary Policy Actions

The RBI implemented an accommodative monetary policy stance throughout 2025, reducing the repo rate on four occasions. This progressive easing brought the benchmark interest rate down significantly over the course of the year.

The inflation performance remained within the RBI's comfort zone, while economic growth maintained robust momentum during the January-September period.

Operational Improvements and Customer Focus

The central bank enhanced its internal governance and customer service delivery mechanisms during 2025. Malhotra highlighted that "a vital dimension of our work this year was the emphasis on customer service and grassroots engagement."

The RBI also implemented re-KYC camps and unclaimed deposits campaigns as part of its customer-focused initiatives.

Institutional Values and Future Outlook

Malhotra emphasized that technical excellence must be coupled with commitment to the central bank's "core institutional values" of integrity, independence, efficiency, humility and a deep sense of public service. He told staff that the RBI's strength "has always flowed from its people and from a shared belief that our work, though often unseen, makes a meaningful difference to the nation."

The Governor stressed that achieving 2026 objectives would require enhanced analytical capabilities, technology adoption, and process improvements, while maintaining focus on customer centricity and financial inclusion as central to the RBI's mission.

The Reserve Bank of India has issued a stern warning about the potential risks posed by widespread stablecoin adoption, stating it could significantly threaten India's monetary sovereignty and financial stability. The central bank outlined these concerns in a special feature within its bi-annual financial stability report released on Wednesday, emphasizing that "trust in money is the foundation for maintaining financial stability."

Key Risks to Monetary Control

The RBI emphasized that stablecoins create important financial stability risks due to their inherent vulnerabilities. The central bank particularly highlighted concerns about foreign currency denominated stablecoins, which could erode monetary control and weaken the transmission channels of domestic monetary policy. The RBI maintains a cautious stance on crypto assets, including stablecoins, prioritizing sovereign digital infrastructure to safeguard monetary sovereignty amid global shifts.

Fundamental Shortcomings of Stablecoins

According to the RBI, stablecoins position themselves as an alternative form of money but fall short of foundational requirements expected from a sound monetary system. The central bank identified three critical deficiencies that make stablecoins inadequate as a monetary instrument.

The RBI noted that in their short history, stablecoins have proven volatile and vulnerable to confidence shocks and structural fragilities, citing episodes such as the May 2022 collapse of TerraUSD and the March 2023 US banking turmoil. Currently, the central bank maintains that risks from stablecoins to macrofinancial stability outweigh their purported benefits.

CBDC Advocacy and Policy Position

The central bank strongly advocates for Central Bank Digital Currencies over privately issued stablecoins. The RBI argues that CBDCs can achieve the benefits stablecoins claim to offer—efficiency, programmability, and instant settlement—while maintaining the credibility and safety of central bank money. The central bank emphasized that central bank money must remain the ultimate settlement asset and anchor for trust in the financial system.

Regulatory and Security Concerns

The RBI highlighted several critical concerns regarding stablecoin regulation and security. Without adequate regulation, stablecoins can be exploited for serious crimes, including money laundering, terrorism financing, and weapons proliferation financing. The central bank cautioned that stablecoins can circumvent controls on capital movement and complicate macroeconomic management, particularly for emerging economies like India where capital flow management frameworks play a crucial role in preserving external sector stability.

Stablecoins can bypass current foreign exchange transfer systems, impeding the effectiveness of capital flow management measures designed to maintain macroeconomic stability, safeguard foreign exchange reserves, and manage risks associated with sudden and volatile capital flows.

Global Regulatory Landscape

The RBI acknowledged that stablecoin growth could be driven by emerging legal and regulatory frameworks across major jurisdictions between 2023 and 2025, including the United States, European Union, Singapore, Hong Kong, and Japan. However, the central bank maintains its position that jurisdictions must carefully assess attendant risks and determine policy responses appropriate to their financial systems to mitigate risks posed by rapid stablecoin growth.