New Delhi, Jan 5 (PTI) In a historic financial reform, the Delhi government on Monday signed a Memorandum of Understanding (MoU) with the Reserve Bank of India, with a focus on rejuvenating Yamuna, enhancing water supply and infrastructure development.

Under the MoU, the RBI will function as the banker, debt manager and financial agent of the government, enabling market borrowing 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.

Delhi Chief Minister Rekha Gupta said all funds raised through market borrowings would be utilised exclusively for capital expenditure, with priority sectors including Yamuna rejuvenation, 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.

The meeting was attended by senior officials of the Delhi government and the RBI, including Additional Chief Secretary (Finance) Bipul Pathak and Chief Secretary Rajiv Verma.

Describing the agreement as a "transformational milestone", she said the MoU marks a decisive break from past practices and ushers Delhi into a new era of fiscal prudence, institutional discipline and infrastructure-led economic growth.

"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. Earlier governments never showed the intent or vision to adopt globally accepted norms of fiscal prudence. Today, that decisively changes," Gupta said.

The CM said successive AAP governments neither invested surplus public funds nor adopted cost-efficient borrowing mechanisms, leaving excess cash idle and undertaking high-cost borrowings, resulting in a loss of interest income and an unnecessary 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," she said.

Under the MoU, surplus funds of the Delhi government will be automatically invested on a daily basis through RBI mechanisms, access will be available to Ways and Means Advances and Special Drawing Facilities for managing temporary cash flow mismatches, and market borrowings will be undertaken at competitive interest rates of around seven per cent through State Development Loans, replacing earlier high-cost borrowings at 12-13 per cent.

With the agreement, Delhi will be fully integrated with the RBI banking system, benefiting from professional banking, cash management and debt management systems.

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 enabling Delhi to secure an independent and transparent banking framework aligned with national fiscal norms.

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

"This MoU is not merely an administrative arrangement. It is a historic financial reform that Delhi will benefit from for decades," she said. PTI SLB NB NB

Delhi and RBI agree to RBI banking, automatic surplus investment and State Development Loans for capital projects. The MoU appoints the RBI as banker, debt manager and financial agent for Delhi, providing integration into RBI banking systems, automatic daily investment of surplus cash, access to Ways and Means Advances and Special Drawing Facilities, and market borrowings via State Development Loans for capital expenditure focused on Yamuna rejuvenation, water supply, health infrastructure and transport.