Chief Minister Rekha Gupta-led Delhi government on Monday signed a Memorandum of Understanding (MoU) with the Reserve Bank of India (RBI), with a focus on rejuvenating the Yamuna River, enhancing drinking water facilities, improving the public infrastructure, and strengthening financial governance in the national capital. The MoU was signed during a meeting chaired by the chief minister at the Delhi Secretariat.
The meeting was attended by senior officials of the Delhi government and the RBI.
Under the MoU, the central bank will function as a banker, debt manager, and financial agent for the Delhi government. This will help in facilitating market borrowings through State Development Loans, automatic investment of surplus cash, professional cash management, and access to low-cost liquidity facilities within the framework prescribed by the Government of India and the RBI Act.
Gupta, who holds the finance portfolio, said signing of the MoU is a transformational milestone and a long-overdue reform. She also took a dig at previous governments, saying they never showed the intent or vision to adopt globally accepted norms of fiscal prudence.
"This agreement marks a historic correction in Delhi’s financial governance. Despite being the nation’s capital, Delhi was denied the benefits of structured RBI banking and market borrowings for years," the chief minister stated.
"In contrast, this government has placed fiscal discipline, transparency, and long-term sustainability at the core of governance. Every rupee of public money must now work for the people of Delhi," she added.
What are the priority sectors for the MoU?
- Yamuna rejuvenation and drainage infrastructure
- Drinking water supply systems
- Hospitals and health infrastructure
- Public transport and urban mobility
- Roads, flyovers, and other essential urban infrastructure
What are the key fiscal transformations under the MoU?
- Under the MoU, excess cash balance with the Delhi Government will be automatically invested on a daily basis through RBI mechanisms, generating interest income and eliminating losses caused by idle funds.
- Delhi will now have access to Ways and Means Advances and Special Drawing Facilities from the RBI, ensuring efficient management of temporary cash flow mismatches without resorting to expensive or emergency borrowing.
- The national capital will also raise funds from the open market at competitive interest rates of approximately 7 per cent through State Development Loans, replacing earlier high-cost borrowing at interest rates of 12 to 13 per cent from alternative sources.
- Thanks to the MoU, Delhi now stands at par with other states and union territories (UTs) with legislatures, benefiting from RBI's professional banking, cash management, and debt management systems.
Gupta said the reform followed sustained engagement with the central government and her meeting with Union Finance Minister Nirmala Sitharaman in December last year. She also thanked Prime Minister Narendra Modi for his visionary leadership and continued guidance, and for enabling Delhi to secure an independent and transparent banking framework.
She emphasised that strict fiscal discipline, RBI-guided processes, and institutional investor participation will enhance Delhi’s economic competitiveness, generate employment, and significantly improve the quality of life for citizens.
"This MoU is not merely an administrative arrangement. It is a historic financial reform that Delhi will benefit from for decades. With this step, Delhi embarks on a new journey of responsible governance, strong institutions, and sustainable growth, fully aligned with the vision of a developed India," Gupta said.
