The Indian rupee has fallen to a record low, closing at 94.92 against the US dollar, raising concerns about the Reserve Bank of India's (RBI) monetary policy. Bankers in Mumbai are questioning how soon the RBI will need to raise interest rates to combat inflation and stabilize the currency. The RBI, led by Governor Sanjay Malhotra, has maintained a pro-growth, easy-money stance, slashing borrowing costs by 125 basis points since December 2024 and injecting nearly ₹20 trillion (approximately $210 billion) into banks. However, with $26 billion pulled out of Indian equities, the RBI may need to shift its strategy to defend the rupee, which has declined 12% over the past two years. The Finance Ministry has warned of a supply shock in the economy, indicating that while consumer and business credit was previously growing at 14.5%, demand compression is a serious concern. The government is also facing challenges in shielding consumers from rising crude oil prices, which may lead to higher inflation. If the RBI delays necessary interest rate hikes, it risks exposing the fragility of the current banking environment, which may not withstand the pressures of high inflation and energy costs.