RBI To Act As Banker And Debt Manager For Delhi Govt From Jan 9, 2026

New Delhi, Jan 6 (KNN) The Reserve Bank of India (RBI) has entered into an agreement with the Government of the National Capital Territory of Delhi (GNCTD) under Section 21A(1) of the RBI Act, 1934, under which the central bank will undertake the general banking business of the Delhi government and manage its rupee public debt. 

The agreement will come into effect from January 9, 2026.

With this arrangement, Delhi will align with other states in adopting a formal, RBI-led framework for managing government finances, borrowings and public funds.

Shift to Structured Cash and Debt Management

Under the agreement, the RBI will serve as the official banker to the GNCTD, managing cash balances, facilitating market borrowings and investing surplus funds. 

A senior government official said the move replaces an ad-hoc system that often resulted in idle cash balances earning minimal returns, while the government simultaneously relied on high-cost borrowing, reported TOI.

Surplus funds will now be automatically invested through RBI mechanisms, generating interest income for the government. In addition, Delhi will be able to access market borrowings at significantly lower interest rates—around 7 per cent—through RBI-managed loans, compared with earlier borrowing costs of 12–13 per cent from alternative sources.

Lower Borrowing Costs, Reduced Fiscal Stress

The agreement is expected to reduce Delhi’s reliance on the National Small Savings Fund, from which it has been among the top high-cost borrowers. RBI support will also enable the government to manage short-term cash mismatches more efficiently, reducing the need for expensive emergency borrowings.

Chief Minister Rekha Gupta, who also holds the finance portfolio, described the agreement as a “historic correction” that would strengthen Delhi’s fiscal position and deliver long-term savings for the exchequer.

Focus on Capital Expenditure

According to officials, funds raised through RBI-managed borrowing will be used exclusively for long-term capital projects rather than routine expenditure. 

(KNN Bureau)