Mumbai, June 30 -- Despite India's strong domestic drivers and fundamentals, spillovers from external challenges and weather-related events could impact growth, said Sanjay Malhotra, governor of the Reserve Bank of India (RBI), on Monday.

In the foreword to the central bank's half-yearly Financial Stability Report, Malhotra said that while there are downside risks to the growth outlook, inflation is benign.

"...there is greater confidence in the durable alignment of inflation with the RBI's target," he said, referring to the banking regulator's medium-term target for consumer price index (CPI) inflation of 4%, within a band of +/- 2%.

Retail inflation cooled to its lowest level in over six years in May, aided by a moderation in food pr...