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RBI Circular Update

Banking / Economy Awareness · Current Banking Awareness

Overview

RBI circulars change rules frequently; reliable preparation uses the RBI website and dated notes instead of second-hand summaries.

Key points

Source: rbi.org.in — notifications, master directions, press releases, monetary policy statements.
Record: date, subject, which entities it applies to, and the key change.
Link each circular to its static topic (e.g. a KYC change → KYC/AML notes).
Policy-rate decisions come from the bi-monthly monetary policy statement.
Master directions consolidate rules on a subject.

Explanation

Do not rely on social-media summaries for numbers.
Revise the last 6–12 months before the exam.
Keep a one-page table of the latest policy rates from the official statement.
Note effective dates, not just announcement dates.

Step by step

Identify the institution, rule or instrument asked.
Recall its definition, year, limit or function from a table.
Eliminate options from similar institutions or older rules.

Examples

Note format: "[date] — RBI — [subject] — applies to [entities] — key change [x]".
A policy-rate change is recorded from the monetary policy statement, not news headlines.
A new payment-safety rule is linked to the digital-payment-safety notes.

Traps and advanced points

Trap: Using unverified summaries.
Trap: Recording announcement date only.
Trap: Not linking to static topics.

Quick revision

Source: rbi.org.in.
Date + subject + applicability.
Link to static notes.

Practice MCQs

Which term-description pair is correctly matched for the concept “CRR”?
1. CRR — Cash Reserve Ratio
2. SLR — Cash Reserve Ratio
3. CRR — Anti-Money Laundering
4. CRR — mechanisms used to absorb surplus liquidity from the banking system
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Answer: (a) CRR — Cash Reserve Ratio. Share of bank NDTL maintained as cash balance with RBI, as prescribed.
In banking/finance, what does “reverse repo / liquidity absorption operations” refer to most accurately?
1. rate at which RBI lends short-term funds against eligible collateral under the liquidity framework
2. mechanisms used to absorb surplus liquidity from the banking system
3. temporary deferment arrangement under specified loan terms/rules
4. funds used for day-to-day operating needs
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Answer: (b) mechanisms used to absorb surplus liquidity from the banking system. Operational frameworks can evolve; learn the current RBI liquidity framework near the exam.
Which term-description pair is correctly matched for the concept “bank rate”?
1. bank rate — a rate associated with RBI lending/rediscounting framework
2. NPA — a rate associated with RBI lending/rediscounting framework
3. bank rate — Current Account Savings Account
4. CASA — a rate associated with RBI lending/rediscounting framework
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Answer: (a) bank rate — a rate associated with RBI lending/rediscounting framework. Distinguish it from the policy repo rate.
The Reserve Bank of India was established on
1. 1 April 1935
2. 15 August 1947
3. 1 January 1949
4. 26 January 1950
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Answer: (a) 1 April 1935. RBI was set up under the RBI Act, 1934 and nationalised on 1 January 1949.
The rate at which RBI lends short-term funds to banks against government securities is the
1. bank rate
2. reverse repo rate
3. repo rate
4. CRR
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Answer: (c) repo rate. Repo is RBI's main policy rate.
The share of deposits that banks must keep as cash with RBI is the
1. Statutory Liquidity Ratio
2. Cash Reserve Ratio
3. Capital Adequacy Ratio
4. Priority Sector target
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Answer: (b) Cash Reserve Ratio. CRR is kept with RBI; SLR is kept by the bank itself in liquid assets.
How many members does RBI's Monetary Policy Committee have
1. 9
2. 5
3. 7
4. 6
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Answer: (d) 6. Three from RBI, including the Governor, and three external members.
The CPI inflation target set for RBI under the flexible inflation targeting framework is
1. 6% fixed
2. 2% with a band of ±1%
3. 4% with a band of ±2%
4. 5% with a band of ±3%
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Answer: (c) 4% with a band of ±2%. The tolerance band is 2% to 6%.
The RBI Integrated Ombudsman Scheme, which handles complaints against banks and NBFCs, was launched in
1. 2016
2. 2021
3. 2008
4. 1995
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Answer: (b) 2021. It merged three earlier ombudsman schemes into 'One Nation One Ombudsman'.