The International Monetary Fund (IMF) is preparing to reopen a contentious chapter in its relationship with Asia’s third-largest economy, with sources in Washington indicating that the multilateral lender is weighing a fresh reclassification of India’s foreign exchange rate regime.

The move comes as the rupee experiences heightened volatility under the new leadership at the Reserve Bank of India (RBI), reigniting a debate over how much control New Delhi exerts over its currency.

According to people familiar with the matter who spoke to Bloomberg, the Fund is closely scrutinizing the rupee’s trading patterns over the past year. This review signals a potential shift just two years after a similar assessment triggered a rare public dispute between the Indian government and the IMF. In December 2023, the Fund downgraded India’s de facto exchange rate regime from “floating” to a “stabilized arrangement,” a technical designation implying that the central bank was managing the currency within a disproportionately narrow band—effectively a soft peg.

That 2023 decision, based on data covering December 2022 to November 2023, drew a sharp rebuke from Mint Street. The RBI called the characterization “incorrect” and “unjustified,” arguing that its interventions were solely designed to smooth excessive volatility and prevent disorderly market conditions, not to target a specific level against the dollar. New Delhi further contended that the IMF’s models failed to account for the unique external pressures of the time, including surging U.S. Treasury yields and a relentless dollar rally that forced emerging markets globally to deploy reserves defensively.

The Malhotra Shift

The context for this latest review, however, has shifted significantly. The scrutiny coincides with the tenure of Governor Sanjay Malhotra, who assumed office late last year. Under Malhotra’s stewardship, the rupee has exhibited sharper, more frequent fluctuations—a departure from the tight grip observed in previous years. Traders in Mumbai report wider intraday trading bands and more aggressive, two-way intervention, suggesting that the central bank is testing a new operational philosophy that allows for greater price discovery while still curbing extreme outliers.

Market data support this view. The rupee recently slumped to a record low of nearly 89.50 per dollar, driven by portfolio outflows and uncertainty over U.S. trade policy. The RBI’s willingness to let the currency drift lower before intervening has caught some market participants off guard, yet it may paradoxically complicate the IMF’s assessment. While the “stabilized arrangement” tag was applied because the rupee moved too little, a shift back to “floating” would require the Fund to be convinced that recent interventions are not targeting a new, lower floor.

For the IMF, these classifications are driven by empirical data rather than stated policy. The Fund’s economists analyze the statistical predictability of the exchange rate and its correlation with external benchmarks over extended periods. If the data shows that the rupee has tracked a specific path regardless of market fundamentals, the “stabilized” label sticks.

While an IMF reclassification carries no direct punitive weight—it triggers no sanctions or loan conditions—it holds significant symbolic power. For foreign investors, the label serves as a proxy for the transparency and freedom of India’s capital markets. A “floating” status is often viewed as a seal of approval for a maturing economy ready to integrate fully with global finance, while a “stabilized” tag can imply heavy-handed state management that might trap capital or distort valuations.

A fresh reclassification would likely revive the philosophical tension between the RBI’s pragmatic interventionism and the IMF’s orthodox preference for market-clearing prices. The central bank has consistently maintained that in a shallow market like India’s, allowing pure unbridled volatility can be destructive to the real economy. The IMF, conversely, maintains that persistent intervention blunts the signals that exchange rates are supposed to provide.

As the rupee adjusts to a strengthening dollar and India’s deepening integration into global bond indices, this coming review threatens to become another flashpoint. It will test not just the technical definitions of currency management, but the diplomatic ability of Governor Malhotra’s team to convince Washington that the recent volatility is a feature of a free market, not a bug in a managed system.

Dutch Financial Powerhouse ABN Amro to Cut over 5,000 Jobs by 2028

ABN Amro, a pillar of the Dutch financial system, unveiled a sweeping strategic overhaul on Tuesday that will see the lender shed approximately 5,200 full-time jobs by 2028.

The aggressive “2028 Roadmap,” presented ahead of the bank’s capital markets day, marks the first major strategic pivot under CEO Marguerite Bérard, aiming to transform the institution into a leaner, more profitable operator capable of remaining independent in a consolidating European market.

Investors responded enthusiastically to the efficiency pledge, sending shares more than 4% higher at the open, signaling strong approval for the bank’s focus on capital discipline and shareholder returns.

The “Right-Sizing” Initiative

The planned reduction of 5,200 full-time equivalent (FTE) roles represents more than a fifth of the bank’s total workforce. However, the cuts are designed to be methodical rather than immediate. ABN Amro indicated that roughly half of the reductions would be achieved through natural attrition—hiring freezes and retirements—rather than direct layoffs.

The restructuring is deeply tied to a technological modernization drive. The bank plans to phase out expensive legacy IT systems in favor of automated, AI-embedded processes, particularly in operational and compliance functions. This aligns with a broader trend in the Dutch banking sector, where institutions are increasingly deploying artificial intelligence to handle routine tasks such as anti-money laundering (AML) checks, reducing the need for massive human compliance teams.

Integration of New Acquisitions

Crucially, the job cuts will not be limited to the legacy Dutch organization. The efficiency drive will extend to the bank’s recent high-profile acquisitions, signaling an aggressive integration strategy.

• NIBC Bank: Recently acquired from Blackstone for approximately €960 million, this specialist lender adds significant weight to ABN Amro’s mortgage and savings books. The bank aims to extract “synergies” by merging NIBC’s operations with its own, projecting an impressive 18% return on invested capital from the deal by 2029.
• Hauck Aufhäuser Lampe: The recently purchased German wealth manager will also face restructuring as ABN Amro seeks to eliminate overlapping back-office functions and streamline its private banking footprint in Northwest Europe.

The Alfam Sale

In a move to sharpen its focus on core banking activities, ABN Amro agreed to sell its personal loan subsidiary, Alfam, to domestic rival Rabobank. The deal reflects a pragmatic admission that the personal loans market has become a volume game requiring massive scale to be profitable.

• The Rational: By selling Alfam to Rabobank, whose consumer credit arm (Freo) already commands significant market share, ABN Amro exits a highly competitive, lower-margin product line.
• The Structure: The deal is structured to ensure continuity; ABN Amro will continue to offer personal loans to its clients, but the underlying product will be powered by the new combined Rabobank-Alfam entity.
• Financial Impact: While the sale will trigger a one-time book loss of roughly €100 million, it cleans up the balance sheet significantly. The transaction is expected to reduce risk-weighted assets (RWA) by €1.2 billion and boost the bank’s Common Equity Tier 1 (CET1) ratio by 5 basis points.

Financial Targets and Capital Returns

The “2028 Roadmap” outlines a rigorous set of financial targets designed to prove the bank’s standalone viability as the Dutch state continues to unwind its remaining equity stake.

• Profitability: The bank is targeting a Return on Equity (ROE) of at least 12% by 2028, supported by a reduced cost-to-income ratio of below 55%.
• Revenue: Management has set a revenue floor, aiming for annual income to consistently exceed €10 billion.
• Shareholder Payouts: Perhaps most attractive to investors is the capital return policy. ABN Amro plans to distribute up to 100% of the capital it generates between 2026 and 2028 to shareholders, provided it maintains a CET1 capital ratio above 13.75%.

Addressing persistent market rumors that ABN Amro could be a takeover target for a larger European rival, CEO Marguerite Bérard remained defiant.

“We are building ABN Amro’s future on its own strength,” she stated, framing the restructuring as the foundation for a robust, independent future rather than a dressing-up for a sale.