RBI Grade B Current Affairs — 29 July 2026

The Reserve Bank of India's Monetary Policy Committee, chaired by Governor Sanjay Malhotra, unanimously kept the repo rate unchanged at 5.25 percent with a neutral stance in its first bi-monthly meeting of 2025-26. The Standing Deposit Facility rate stands at 5.00 percent and the MSF/Bank Rate at 5.50 percent. RBI projected real GDP growth at 6.9 percent for 2025-26 and estimated 2024-25 GDP at 7.6 percent. CPI inflation for 2025-26 is projected at 4.6 percent.

This MPC decision is significant on multiple fronts. First, the unanimous vote signals MPC cohesion even amid global headwinds — the West Asia conflict and El Niño risks — that could push up energy prices, freight costs, and supply-chain disruptions, all of which feed into domestic inflation and compress growth. The neutral stance, as opposed to 'withdrawal of accommodation,' gives RBI flexibility to pivot either way without signalling an immediate rate hike or cut.

The GDP projection of 6.9 percent for FY26 — down from the 7.6 percent estimated for FY25 — reflects a measured acknowledgement that external shocks are beginning to bite. Yet Governor Malhotra stressed that India's macroeconomic fundamentals are on stronger footing now than in previous shock episodes, implying greater resilience.

On the exchange rate, the RBI reiterated its market-determined framework while reserving the right to intervene to curb excessive volatility — not to defend any specific rupee level. This matters because the rupee depreciated more in 2025-26 than the historical average despite stronger fundamentals, raising concern about imported inflation.

For exam purposes, the key interplay is: unchanged repo rate + neutral stance + downward growth revision + upside inflation risks = a classic 'wait-and-watch' monetary policy calibration. Students must distinguish between the three corridor rates (SDF, repo, MSF) and understand what each signals about RBI's liquidity management posture.

The Central Board of Direct Taxes (CBDT), under India's Ministry of Finance, released a revised Guidance Note on FATCA (Foreign Account Tax Compliance Act) and CRS (Common Reporting Standard) to strengthen Automatic Exchange of Information (AEOI) frameworks. This updated note clarifies due diligence obligations, reporting requirements, and entity classification for Financial Institutions. India participates in AEOI under the OECD-led CRS framework and the bilateral India-US FATCA Intergovernmental Agreement (IGA), both aimed at curbing cross-border tax evasion.

FATCA and CRS are two parallel but distinct frameworks designed to combat offshore tax evasion through automatic information sharing between tax authorities globally. FATCA is a US law requiring foreign financial institutions to report US account holders' data to the IRS, typically via an Intergovernmental Agreement (IGA). India signed a Model 1 IGA with the US in 2015, making CBDT the competent authority for compliance. CRS is the OECD's multilateral standard adopted by over 100 jurisdictions, including India, enabling tax authorities to automatically receive information on residents' foreign financial accounts annually. India exchanges CRS data through the Multilateral Competent Authority Agreement (MCAA). The CBDT guidance note matters because it operationalises these frameworks domestically — telling banks, mutual funds, insurance companies, and depositories exactly how to classify accounts, perform due diligence, and file reports. The revised note is significant for RBI Grade B and SEBI Grade A aspirants because it sits at the intersection of international tax law, financial regulation, and AML/CFT compliance. For SEBI, regulated entities like brokers and depository participants are Reporting Financial Institutions under CRS. For RBI, commercial banks must identify Reportable Accounts and submit returns. Non-compliance attracts penalties, making the guidance note operationally critical for India's financial sector.

The Central Board of Direct Taxes (CBDT), under the Ministry of Finance, released a comprehensive Guidance Note on Crypto-Asset Reporting under the Income-tax Act, 2025. The note clarifies reporting obligations for Virtual Digital Assets (VDAs), including cryptocurrencies and NFTs, covering taxation under Section 115BBH at 30%, the 1% TDS under Section 194S, and disclosure requirements for domestic and foreign crypto holdings under the new framework.

India's crypto taxation framework, introduced via the Finance Act 2022, created a distinct regime for Virtual Digital Assets (VDAs). Section 115BBH imposed a flat 30% tax on VDA transfer gains with no deduction for losses or carry-forward. Section 194S mandated 1% TDS on VDA transfers above specified thresholds. However, operational ambiguities persisted around reporting — particularly for decentralised exchanges, peer-to-peer transactions, and foreign-held crypto assets. The CBDT Guidance Note 2025 addresses these gaps comprehensively. It aligns India's domestic framework with the OECD's Crypto-Asset Reporting Framework (CARF), which India is committed to implementing under G20 obligations. CARF requires Reporting Crypto-Asset Service Providers (RCASPs) to collect and exchange user data with tax authorities. The Guidance Note specifies which entities qualify as RCASPs, which asset classes fall under VDA definitions, and how foreign crypto holdings must be disclosed in Schedule FA of ITR. For SEBI, the note has capital-market implications as crypto derivatives and tokenised securities blur boundaries between regulated and unregulated instruments. For RBI, it intersects with CBDC policy and shadow banking concerns about stablecoin adoption. UPSC examinees must understand this as India's move toward formalising the digital asset economy within a statutory tax architecture.

India's income tax return data, tabled in Parliament in 2025-26, reveals that 576 individuals reported gross total income of Rs 100 crore or more, a fourfold rise from approximately 141 such taxpayers five years ago. This surge reflects growing income concentration at the top. The data, sourced from the Income Tax Department, was disclosed in response to a parliamentary query, highlighting widening wealth inequality even as India's formal taxpayer base has expanded significantly.

The fourfold jump in ultra-high-income taxpayers — from roughly 141 to 576 in five years — is a significant data point for understanding India's evolving income distribution. It emerges from ITR filings, meaning it captures only declared income, making the actual wealth concentration likely even sharper. For policymakers and economists, this matters on multiple levels. First, it signals that economic growth has been disproportionately captured by the top of the income pyramid, a pattern corroborated by global inequality reports such as the World Inequality Report, which flagged India as having one of the highest income concentrations among large economies. Second, it raises questions about the adequacy of India's progressive taxation architecture — whether surcharge rates on super-rich incomes, capital gains tax structures, and dividend taxation are effectively redistributive. Third, for the RBI, extreme wealth concentration has macroeconomic implications: it can dampen aggregate consumption (since the ultra-rich have lower marginal propensity to consume), affect credit demand patterns, and influence asset price inflation in real estate and equities. From a fiscal policy angle, this data fuels debates around inheritance tax, wealth tax revival, and whether a higher surcharge bracket is warranted. The UPSC examiner typically uses such data to probe inequality measurement, fiscal federalism, and redistribution mechanisms.