New Delhi: Delhi govt on Monday signed an agreement with Reserve Bank of India (RBI), bringing the national capital on a par with other states in how it manages money, borrowings and public funds.Under the agreement, RBI will now act as the govt’s official banker, helping it manage cash, raise loans from the market and invest surplus money efficiently. Until now, Delhi followed an ad-hoc system that often left public money idle and forced the govt to borrow at high interest rates, said a senior govt official.Chief Minister Rekha Gupta, who also holds the finance portfolio, described the move as a “historic correction” that will save public money and strengthen Delhi’s finances in the long run. The official said the agreement means the Delhi govt will now handle its finances in a more professional and cost-effective way.“Earlier, surplus govt money often remained unused in bank accounts, earning little or no interest. At the same time, when funds were needed, the govt borrowed from alternative sources at steep interest rates of 12-13%. Under the new system, any extra cash will be automatically invested through RBI, earning interest for the govt,” he said.More importantly, Delhi will now borrow money directly from the market at much lower rates, around 7%, through RBI-managed loans, similar to other states. This alone is expected to significantly reduce the burden on public finances, he said.Delhi govt is among the top borrowers from the high-cost National Small Savings Fund. The pact with RBI is likely to put an end to this mechanism, enabling large savings for the exchequer.The central bank will also help Delhi govt manage short-term cash shortages, so it doesn’t have to resort to expensive emergency borrowing.Lower borrowing costs mean that more money can be spent on public services instead of interest payments. The govt said that all funds raised through this route will be used only for long-term projects, not day-to-day expenses, the official said.The CMO said projects and sectors likely to benefit include Yamuna clean-up, drainage systems, drinking water supply, hospitals, public transport, roads and flyovers. The govt already increased capital spending in the 2025–26 budget by 135% compared to last year.Officials say this kind of spending creates assets, boosts jobs and supports long-term growth without passing on the financial burden to future generations.The CM said that this major reform is the outcome of sustained engagement with the Union govt and followed her recent meeting with Union finance minister Nirmala Sitharaman in Dec 2025, where key issues concerning fiscal autonomy and modernisation of Delhi’s financial architecture were discussed.
