New Delhi: In a major overhaul of Delhi’s financial architecture, the BJP-led Delhi government on Monday signed a historic Memorandum of Understanding (MoU) with the Reserve Bank of India, a move that Chief Minister Rekha Gupta described as a “transformational correction” that ends decades of financial limitations and brings the national capital at par with other states.
The MoU authorises the RBI to act as the banker, debt manager and financial agent of the Government of NCT of Delhi, enabling structured cash management, market borrowings and access to low-cost liquidity facilities. The agreement was signed at the Delhi Secretariat in the presence of senior officials from the Delhi government and the RBI, including Chief Secretary Rajiv Verma.
Calling the pact a long-pending reform, CM Gupta said, “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. Today, that decisively changes.”
She said previous governments failed to adopt globally accepted fiscal practices, leading to inefficiencies and financial losses. “Earlier governments never showed the intent or vision to adopt norms of fiscal prudence. Excess public funds remained idle while borrowings were undertaken at high interest rates, placing an unnecessary burden on public finances,” she said.
Under the new arrangement, surplus cash with the Delhi government will be automatically invested through RBI mechanisms, generating interest income. Delhi will also gain access to RBI’s Ways and Means Advances and Special Drawing Facilities to manage temporary cash flow gaps without resorting to costly borrowing.
For the first time, the capital will be able to raise funds from the open market through State Development Loans at competitive interest rates of around seven percent, replacing earlier borrowings at rates as high as 12 to 13 percent. “Every rupee of public money must now work for the people of Delhi,” the Chief Minister said.
Gupta noted that the reform follows sustained engagement with the Union government and her recent meeting with Union Finance Minister Nirmala Sitharaman. She thanked Prime Minister Narendra Modi for his “visionary leadership” in enabling Delhi to secure an independent and transparent banking framework.
From January 9, Delhi’s public accounts will be fully separated from those of the Government of India, granting the city its own independent banking and borrowing structure.
The Chief Minister stressed that all market borrowings will be used strictly for capital expenditure. “Funds will be invested in long-term assets, not short-term populism,” she said, adding that priority sectors include Yamuna rejuvenation, drinking water supply, health infrastructure, public transport, roads and flyovers.
“This MoU is not merely an administrative arrangement. It is a historic financial reform that Delhi will benefit from for decades,” Gupta said.