New Delhi

The Delhi government on Monday signed a Memorandum of Understanding (MoU) with the Reserve Bank of India (RBI), marking a major financial reform aimed at rejuvenating the Yamuna, strengthening water supply systems, and accelerating infrastructure development in the national capital.

Under the MoU, the RBI will act as the banker, debt manager, and financial agent of the Delhi government. The arrangement will enable market borrowing through State Development Loans (SDLs), automatic investment of surplus funds, professional cash management, and access to low-cost liquidity facilities, in line with the framework prescribed by the Government of India and the RBI Act.

Delhi Chief Minister Rekha Gupta said all funds raised through market borrowings would be utilised exclusively for capital expenditure. Priority sectors include the rejuvenation of the Yamuna, drinking water supply, health infrastructure, public transport, roads, and flyovers.

The MoU was signed at a meeting held at the Delhi Secretariat, chaired by Gupta, who also holds the finance portfolio. Senior officials from the Delhi government and the RBI attended the meeting, including Additional Chief Secretary (Finance) Bipul Pathak and Chief Secretary Rajiv Verma.

Describing the agreement as a “transformational milestone,” Gupta said the MoU marked a decisive break from past financial practices and ushered Delhi into a new phase of fiscal prudence, institutional discipline, and infrastructure-led economic growth.

“This agreement represents 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. Earlier governments never demonstrated the intent or vision to adopt globally accepted norms of fiscal prudence. That changes decisively today,” she said.

The Chief Minister alleged that successive AAP governments neither invested surplus public funds nor adopted cost-efficient borrowing mechanisms, leaving excess cash idle while resorting to high-cost borrowings. This, she said, resulted in a loss of interest income and placed an avoidable burden on public finances.

“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,” Gupta said.

Under the MoU, surplus funds of the Delhi government will be automatically invested on a daily basis through RBI mechanisms. The government will also gain access to Ways and Means Advances and Special Drawing Facilities to manage temporary cash flow mismatches. Market borrowings will be undertaken at competitive interest rates of around seven per cent through SDLs, replacing earlier borrowings that reportedly carried interest rates of 12–13 per cent.

With the agreement, Delhi will be fully integrated into the RBI’s banking system, benefiting from professional banking, cash management, and debt management services.

Gupta said the reform followed sustained engagement with the Union government and her meeting with Union Finance Minister Nirmala Sitharaman in December 2025. She also expressed gratitude to Prime Minister Narendra Modi for facilitating an independent and transparent banking framework for Delhi aligned with national fiscal norms.

According to a central government notification dated January 2, effective January 9, the public accounts of the Government of the National Capital Territory of Delhi have been separated from those of the Government of India, granting the capital an independent banking and borrowing structure for the first time.

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“This MoU is not merely an administrative arrangement. It is a historic financial reform whose benefits Delhi will reap for decades,” Gupta said.