New Delhi, August 6, 2025 — In a candid interaction following the Monetary Policy announcement, Reserve Bank of India (RBI) Governor Malhotra addressed critical issues surrounding India’s financial ecosystem. He acknowledged Prime Minister Narendra Modi’s appreciation for RBI’s efforts in promoting financial inclusion across gram panchayats, and offered clarity on concerns related to non-performing assets (NPAs), the microfinance segment, and digital fraud.
“Financial Inclusion Is Our Top Priority” – RBI Governor
Responding to Prime Minister Modi’s recent praise, Governor Malhotra extended his gratitude and reiterated that financial inclusion remains one of RBI’s most vital missions. He emphasized that this commitment has been explicitly highlighted in the Monetary Policy Statement and urged all stakeholders, including the media, to help publicize the RBI's grassroots efforts.
“We want every Indian, especially those at the bottom of the pyramid, to benefit from access to formal finance,” Malhotra stated. The RBI has been organizing camps in rural and semi-urban areas to facilitate easier access to banking, credit, and digital payment systems.
RBI Confirms Overall Banking Sector NPAs Remain Stable
Addressing concerns over rising NPAs in the latest bank results, particularly in the Microfinance Institutions (MFIs) and NBFC sectors, the Governor clarified that there is no significant overall deterioration in asset quality.
“Gross NPAs remain at 2.2%, and Net NPAs are around 0.5–0.6%, which is quite satisfactory,” he said.
However, Gov admitted that some stress had been visible earlier in unsecured personal loans and MFI portfolios, prompting the RBI to increase risk weights in those categories. That regulatory move has since helped curb the excessive credit growth that was being witnessed in these high-risk lending segments.
NBFCs Charging Usurious Rates? RBI Monitoring Closely
On concerns about NBFCs operating in the priority sector but charging moneylender-like interest rates, the Governor noted the RBI’s vigilance. He acknowledged that MFIs and NBFCs serve a vital role in reaching underserved populations — a group that comprises over 8 crore loan accounts.
Although the MFI sector accounts for just 2% of the total banking system's credit exposure (approx. ₹3.75 lakh crore out of ₹180 lakh crore), Governer emphasized its social importance.
“This is a crucial borrower segment. We will continue to monitor and regulate to ensure fair practices without hampering financial inclusion,” he said.
Mule Hunter Initiative Gaining Traction in Fraud Prevention
Addressing digital fraud and fund recovery, Governor said the RBI's “Mule Hunter” initiative is making strong progress, with 15 major banks already onboarded. The platform is designed to trace and halt fraudulent transactions and block mule accounts used for money laundering or scam-based fund movement.
He clarified that while the total value of financial frauds in FY 2023–24 remained nearly the same as the previous year, the number of frauds per transaction has declined, indicating improved resilience and awareness.
“Mule Hunter is a big leap forward. It will ensure faster recovery and significantly improve confidence in digital banking,” he noted.
Public Money Is Safer, Recovery Time Improving
When asked how quickly fraud-affected customers can expect refunds, the Governor did not specify timelines but assured that improvements in fraud detection and interbank cooperation are helping speed up recovery of lost funds. As more banks implement Mule Hunter, response times are expected to improve further.
Disclaimer:
The views and statements presented in this article are based on the public remarks made by the Reserve Bank of India (RBI) Governor during a recent media interaction. This blog is intended for informational and journalistic purposes only and does not constitute financial advice or official RBI communication. Readers are advised to refer to official RBI documents and consult financial professionals before making investment or banking decisions.
