CRACKTARGET · REGULATORY EXAMS · GUIDE 04 / 10
A dated RBI circular reading list, October 2026 policy-rate snapshot, monetary-policy concepts and application-based practice.
Reviewed: 23 October 2026
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Read circulars by purpose, applicability and date
A circular question can test the objective, the institution covered, a threshold, an effective date or a small exception. A descriptive answer needs the policy problem and the trade-off. Prepare a short fact card and an explanation card for the same document.
Notice and date check. Rates below are a dated snapshot for 23 October 2026. The reading list includes revised and consolidated directions. A document’s original year does not mean its text is unchanged; read the amendment date and applicability clause.
October 2026 policy-rate snapshot
| Instrument | Rate / requirement | Revision point |
|---|---|---|
| Policy repo rate | 5.50% | The main policy rate in the liquidity adjustment framework. |
| Standing Deposit Facility | 5.25% | Uncollateralised standing liquidity absorption facility. |
| Marginal Standing Facility | 5.75% | Standing overnight borrowing facility for eligible banks, subject to conditions. |
| Bank Rate | 5.75% | Distinguish it from the repo rate; linked regulatory uses remain important. |
| Fixed reverse repo | 3.35% | Do not confuse this rate with the SDF rate. |
| Cash Reserve Ratio | 3.00% | Cash reserve requirement; not an interest rate on a loan. |
| Statutory Liquidity Ratio | 18.00% | Prescribed liquid-asset requirement; distinct from CRR. |
The October MPC decision raised the repo rate by 25 basis points to 5.50%. One basis point is 0.01 percentage point: a move from 5.25% to 5.50% is 25 basis points, not a 25% increase. Check the RBI rate panel again before a later examination.
Priority reading list: 12 document clusters
A means read the original document and make a concise card. B means understand the framework, then deepen it when a relevant update or syllabus topic requires it. This is an editorial shortlist, not every RBI circular issued in the period.
| Priority | Document cluster | What to extract | Exam trap |
|---|---|---|---|
| A | October 2026 MPC resolution, minutes and Monetary Policy Report | Decision, rationale, voting, inflation/growth risks and transmission | Separate the decision from individual members’ arguments. |
| A | Inflation-target framework renewed for 2026–31 | CPI target and tolerance band; price stability with growth considerations | The target remains 4%, with a 2%–6% tolerance band, through March 2031. |
| A | Digital Lending Directions, 2025 | Regulated entity, service provider, borrower protection, disclosures and data | Track the responsible lender and the cooling-off provision. |
| A | Priority Sector Lending Directions, 2025 and subsequent amendments | Eligible categories, bank-specific targets and measurement base | Do not apply one bank category’s target to every institution. |
| A | Integrated Ombudsman Scheme, 2026 | Maintainability, complaint process, redress and transition | Use the July 2026 framework and preserve old-case transition rules. |
| A | Commercial Banks – KYC Directions, 2025; updated 1 October 2026 | Customer identification, beneficial ownership, risk-based due diligence | Commercial-bank directions have their own defined applicability. |
| A | Commercial Banks – Capital Adequacy Directions; updated 7 October 2026 | Capital quality, risk-weighted exposures and buffers | Capital adequacy and day-to-day liquidity are different safeguards. |
| A | Commercial Banks – CRR and SLR Directions; updated 9 October 2026 | Reserve base, maintenance and eligible assets | Do not confuse the CRR percentage with a daily maintenance instruction. |
| B | Co-Lending Arrangements Directions, 2025 | Participation, responsibilities, risk sharing and borrower interface | Explain who remains accountable to the customer. |
| B | Current asset classification / provisioning directions | Asset quality, recognition, provisioning and exceptions | Check which dated framework has commenced for the entity concerned. |
| B | Responsible business conduct and credit-facility directions | Disclosures, fair conduct and product-specific safeguards | Use the current entity-specific text rather than an old summary. |
| B | Payment-system notifications and official statistics | Authorisation, interoperability, resilience and customer protection | Separate a payment rail, an app and the underlying bank account. |
Monetary policy concepts: concise explanations
| Concept | Meaning | Application |
|---|---|---|
| Repo and liquidity | Policy operations influence short-term rates and system liquidity. | A policy-rate announcement and a liquidity operation are related but different decisions. |
| SDF / MSF corridor | Standing absorption and borrowing facilities help guide overnight rates. | Excess liquidity and scarce liquidity can pull market rates in different directions. |
| Open market operations | Outright purchase or sale of securities affects durable liquidity. | A purchase injects liquidity; it is not the same transaction as a repo. |
| Transmission | Policy changes affect funding rates, lending rates, asset prices, expectations and demand. | The speed differs across lenders, borrowers and products. |
| Real interest rate | A nominal rate adjusted for inflation; ex-ante calculations use expected inflation. | Do not mix today’s nominal rate with an unrelated inflation period. |
| Liquidity vs solvency | Liquidity concerns payment ability when due; solvency concerns assets, liabilities and loss absorption. | A solvent institution can still face a short-term liquidity squeeze. |
| Monetary vs fiscal policy | The central bank uses monetary instruments; government taxation/spending are fiscal instruments. | A food-supply disruption may need supply-side and fiscal measures as well as a monetary response. |
| Stance vs rate action | The stance communicates the policy orientation; the rate is a specific instrument setting. | A rate change does not by itself describe every liquidity measure or future decision. |
Worked applications
Case 1: policy transmission
The repo rate rises by 25 basis points, but a household’s existing fixed-rate instalment does not change immediately. Is transmission absent?
Suggested approach: No. Transmission is not identical or instant for every contract. A fixed-rate loan may retain its contractual rate, while new loans, market yields, deposit competition or floating-rate resets respond at different speeds. Discuss funding conditions, benchmark/reset arrangements, borrower demand and risk assessment before reaching a conclusion.
Case 2: a digital loan complaint
A loan app says it is only a service provider and directs every borrower complaint elsewhere. What should your regulatory analysis examine?
Suggested approach: Identify the regulated lender, the service provider’s role, the disclosure and grievance arrangements, and the borrower’s consent/data protections. Outsourcing an interface does not erase the lender’s regulatory responsibilities. Apply the current directions to the specific arrangement instead of assuming every app is itself a bank.
Case 3: capital and liquidity
A bank has a high reported capital ratio but faces heavy deposit withdrawals. What does the ratio establish?
Suggested approach: The ratio addresses capital relative to specified risk-weighted exposures; it does not prove sufficient immediately available cash. Examine liquidity buffers, asset realisation, funding concentration and applicable liquidity rules separately.
Make a seven-field circular card
- Exact title and issuing department.
- Issue date, amendment date and commencement date.
- Entities and transactions covered.
- Policy problem and intended outcome.
- Three operative changes or requirements.
- Important exceptions, thresholds and transition provisions.
- One MCQ and one short analytical question.
Example question pair for digital lending: “Which entity is accountable under the arrangement?” and “How can better disclosures improve trust without solving every credit-risk problem?” This turns a document into usable exam material.
A seven-day revision schedule
| Day | Focus | Output |
|---|---|---|
| 1 | Policy rates, MPC and inflation framework | One dated rate sheet; five concept comparisons |
| 2 | Digital lending and business conduct | Two fact cards and one borrower case |
| 3 | PSL and inclusion | One category/applicability comparison |
| 4 | KYC and grievance redress | Two process maps in short notes |
| 5 | Capital, liquidity and asset quality | Three worked distinction questions |
| 6 | Payments and co-lending | A regulator/platform/responsibility table |
| 7 | Mixed review | 30 questions; two short answers; error repair |
Practice questions with explanations
Attempt each question before opening the answer. These are CrackTarget practice questions.
Q1. A rate rises from 5.25% to 5.50%. The increase is:
- A. 0.25 basis point
- B. 25 basis points
- C. 250 basis points
- D. 25 percentage points
Answer and explanation
B. The change is 0.25 percentage point, equal to 25 basis points.
Q2. Which statement best describes an outright central-bank securities purchase?
- A. It generally absorbs liquidity
- B. It generally injects liquidity
- C. It automatically raises every bank’s capital
- D. It is identical to a tax increase
Answer and explanation
B. Payment for the securities injects liquidity; the transaction is distinct from fiscal taxation or capital issuance.
Q3. Which is essential before applying a regulatory threshold?
- A. The document’s popularity
- B. The applicable entity category and effective version
- C. A social-media summary alone
- D. The oldest available circular
Answer and explanation
B. Applicability, amendment and commencement determine which rule governs the case.
Q4. A 12% nominal return with expected inflation of 7% gives an approximate ex-ante real return of:
- A. 19%
- B. 5%
- C. 7%
- D. 12%
Answer and explanation
B. The usual approximation is nominal return minus expected inflation: 12 − 7 = 5%. The exact Fisher calculation is about 4.67%.
Q5. A well-capitalised bank must always have enough cash for every immediate withdrawal. This is:
- A. True by definition
- B. False: capital and liquidity measure different risks
- C. True if its share price rises
- D. True if it uses mobile banking
Answer and explanation
B. Capital absorbs losses; liquidity concerns meeting obligations when due.
Frequently asked questions
Should I memorise every RBI notification?
Start with the syllabus-linked clusters and major current changes. Read the original text for applicability, exceptions and effective dates.
Are the rates live?
No. The table is a 23 October 2026 snapshot. Use RBI’s current rate panel for later updates.
Can I use an old KYC or Ombudsman summary?
Check it against the current framework and transition provisions. The document year alone is insufficient.
Official sources and further reading
The dates and notice-year labels above matter. Check the issuing authority for later amendments; study priorities and model answers are CrackTarget recommendations.
- RBI: monetary-policy overview and current rates
- RBI: October 2026 MPC resolution
- RBI: monetary-policy statements and minutes
- BIS: RBI speech on the inflation-target renewal through March 2031
- RBI: Master Directions, with amendment dates
- RBI: Digital Lending Directions, 2025
- RBI: Priority Sector Lending Directions, 2025
- RBI: PSL amendment, 7 August 2026
- RBI: Integrated Ombudsman Scheme 2026 FAQ
- RBI: Commercial Banks – KYC Directions, 2025, updated October 2026
- RBI: Commercial Banks – Prudential Norms on Capital Adequacy Directions
- RBI: Commercial Banks – CRR and SLR Directions
- RBI: Co-Lending Arrangements Directions, 2025
Continue your preparation
- Banking Awareness & Financial Inclusion for RBI, SEBI & NABARD
- RBI Grade B Phase 2: ESI Important Topics & Government Schemes 2025–26
- Finance & Management for RBI Grade B: Management Theories Priority List
- Government Schemes 2026: Objectives & Beneficiaries for Banking Exams
Turn revision into practice
Read one section, close the notes and recall the main points. Attempt the questions, review the explanations and revisit errors after two days.