Sanjay Malhotra, the upcoming governor of the RBI, will have to strike a balance between inflation, economic growth, and exchange rate stability—a struggle that outgoing governor Shaktikanta Das was currently engaged in. He must simultaneously address mis-selling of retail financial products, limit digital fraud, and implement regulatory reforms that impact bank lending.

.After the US elections, the currency strengthened and FPIs sold stocks, putting significant pressure on the rupee. In order to encourage investment, key government ministers have simultaneously asked for lower interest rates.

The premise that a central banker cannot independently manage the exchange rate, pursue monetary policy, and permit unrestricted capital flow is known as the "impossible trinity."

In the non-deliverable future market on Monday, the rupee declined, according to forex dealers, which could lead to a bad start on Tuesday. Given the second-quarter economic contraction, the RBI is under pressure to lower interest rates in February; however, this would be challenging if there were any pressure on the exchange rate.

RBI's "three-body problem" as it manages sluggish growth, high inflation, and exchange rate pressures was emphasized by Bank of America analyst Rahul Bajoria in a note published earlier this month.

Malhotra has to deal with the difficulty of putting important regulatory reforms into effect.This involves mandating that banks set aside money for poor loans based on anticipated credit losses. This would negatively impact their bottom line and short-term lending capacity, but it would also improve their ability to handle future defaults.

In order to totally deter banks from taking out project loans, the RBI also suggested forcing lenders to make sizable preparations for projects that are not finished on schedule. The government still believes that banks may help finance corporate investments, nevertheless.

On the retail side, an increasing number of online frauds has resulted from the banking system's significant digital advancements. Despite the security of banking systems, people are losing money to confidence tricksters who deceive customers into thinking they are sending money to legitimate billers or the government. The RBI is under pressure to stop the flood of accusations about digital fraud that flood police agencies' cyber units.

Banks misselling insurance and other financial items has been another problem on the retail side.