RBI Grade B Current Affairs — 10 August 2026

The RBI Monetary Policy Committee announced its first bi-monthly monetary policy statement for FY 2026-27, keeping the repo rate unchanged at 6.25 percent. The MPC projected India's real GDP growth at 6.9 percent for the current fiscal year. The decision reflects the committee's stance of supporting growth while remaining watchful on inflation. This is the first policy review of the new financial year, setting the tone for credit conditions, liquidity management, and the LAF corridor for FY27.

The MPC operates under India's flexible inflation targeting framework, mandated to keep CPI inflation at 4 percent with a band of ±2 percent. When the MPC holds the repo rate unchanged, it signals that the committee sees current monetary conditions as appropriate — neither tight enough to choke growth nor loose enough to risk inflation overshooting the target.

The repo rate is the rate at which RBI lends overnight funds to commercial banks against eligible collateral under the Liquidity Adjustment Facility (LAF). A stable repo rate means the cost of short-term borrowing for banks stays fixed, which transmits through the economy as stable lending rates for consumers and businesses.

The GDP growth projection of 6.9 percent for FY27 is significant because the MPC's growth assessment directly informs its forward guidance. If the committee were pessimistic about growth, it would have cut rates to stimulate credit. By holding and projecting 6.9 percent, the MPC signals confidence in domestic demand resilience even amid global uncertainty.

For NABARD aspirants: the repo rate directly affects NABARD's refinancing rates for agricultural credit, since NABARD borrows from RBI and lends to cooperative banks and RRBs. A stable repo rate keeps agricultural credit costs predictable. For UPSC aspirants: the MPC decision is a live example of monetary-fiscal coordination — the government sets the inflation target, RBI executes it independently through the MPC.

The Government of India has reaffirmed that no charges apply to UPI transactions for users. This policy, backed by RBI guidelines and government subsidy to payment service providers, ensures UPI remains free at the consumer end. The government compensates banks and payment apps through a dedicated incentive scheme. UPI processed over 18,000 crore transactions in FY2024, making it the world's largest real-time payment system. The zero-MDR regime on UPI and RuPay was formally introduced in January 2020.

UPI (Unified Payments Interface), launched in April 2016 by NPCI under RBI's regulatory oversight, operates on a zero Merchant Discount Rate (MDR) model for peer-to-peer and peer-to-merchant transactions. MDR is the fee a merchant pays to its bank for processing a digital payment — under normal card transactions, this fee is shared among the acquiring bank, issuing bank, and the payment network.

For UPI and RuPay debit cards, the government abolished MDR effective January 1, 2020, through the Finance Act 2019. This means merchants pay nothing, and users pay nothing. To prevent payment ecosystem collapse, the government introduced a PLI-style incentive scheme compensating banks and PSPs (Payment Service Providers) for foregone revenue.

From an RBI angle, this is a regulatory intervention in payment system pricing — the RBI has powers under the Payment and Settlement Systems Act, 2007 to regulate charges, interoperability, and access. The Payments Infrastructure Development Fund (PIDF), managed by RBI, further subsidises acceptance infrastructure in Tier-3 to Tier-6 cities and the North-East.

For UPSC, this connects to digital financial inclusion — UPI has become a key vehicle for Jan Dhan-Aadhaar-Mobile (JAM) trinity, enabling direct benefit transfer and reducing cash dependency. The no-charge policy lowers the barrier for low-income users and small merchants, directly serving welfare delivery goals.