RBI Grade B Current Affairs — 28 September 2026

Economists expect the RBI's MPC to raise the repo rate by 25 basis points at its October 5–7 meeting, driven by rising crude oil prices (Brent at $102/barrel), broadening CPI inflation (4.82% in August), and global central bank tightening. The RBI held rates at 5.25% in August. Total hikes this cycle are projected at 50–75 bps across October and December meetings, though some analysts warn tightening risks damaging growth and rural incomes.

This article tests a core transmission mechanism: how external supply shocks feed into domestic monetary policy decisions.

The RBI operates an inflation-targeting framework under which CPI inflation must be kept at 4% (±2%). When inflation threatens to breach the upper tolerance band of 6%, the MPC is mandated to explain and, typically, act. The article shows inflation broadening — from 22 commodities driving 90% of CPI weight in January 2026 to 51 commodities by August 2026 — signalling a supply-side shock becoming demand-generalised, the threshold that typically triggers rate action.

The LAF corridor mechanism: the repo rate is the rate at which banks borrow overnight from RBI. Raising it raises the cost of funds for banks, which pass this on as higher lending rates, cooling credit demand, consumption, and ultimately inflation. However, monetary transmission has lags — 3–6 quarters typically — which is why RBI says it may act before Q3 data confirms broadening.

The article also illustrates the monetary policy dilemma: oil shocks are simultaneously inflationary (raise input costs) and demand-destructive (squeeze real incomes). Raising rates to fight inflation when growth is already moderating risks over-tightening. Q1 FY27 GDP of 7.8% provides comfort, but rural stress from rainfall deficits complicates the picture.

For NABARD aspirants: higher repo rates directly raise NABARD's refinancing costs, tightening agricultural credit availability — a classic second-order effect of monetary tightening on rural finance.

Economists at DBS Bank and HSBC expect RBI's MPC to raise the repo rate by 25 basis points at its October meeting, with a second 25 bp hike projected for December, taking the repo rate to 5.75 per cent. Excess liquidity, which peaked near ₹10–11 lakh crore, has narrowed below ₹5 lakh crore after RBI used VRRR auctions, OMO sales, and FX swaps. CRR hikes and MSS issuance remain under active consideration to tighten conditions further.

This article captures a critical phase in RBI's monetary tightening cycle, where two distinct levers — the policy rate and liquidity management — are being deployed simultaneously. Understanding why both matter requires grasping the LAF corridor mechanics.

The repo rate is the rate at which RBI lends overnight to banks. When excess liquidity floods the banking system, the effective overnight rate (Weighted Average Call Rate, or WACR) drifts toward the reverse repo rate — the floor of the LAF corridor — rather than staying anchored to the repo rate. This weakens monetary policy transmission: even if RBI raises the repo rate, banks that are already flush with cheap funds may not fully transmit the rate signal to borrowers.

To fix this, RBI employs liquidity absorption tools: VRRR (Variable Rate Reverse Repo) auctions absorb surplus at a market-determined rate; OMO sales (selling government securities) permanently drain liquidity; FX spot/swap sales reduce rupee liquidity by selling dollars. The article notes that these operations brought surplus liquidity from ₹10–11 lakh crore down to below ₹5 lakh crore, pulling the WACR closer to the repo rate — a sign of improved transmission.

For the October MPC meeting, the concern is dual: inflation remains elevated, and excess liquidity itself has a modest positive relationship with core inflation (more money chasing goods). CRR hikes and MSS (Market Stabilisation Scheme) bonds are additional tools — CRR locks bank reserves with RBI, while MSS bonds sterilise liquidity more permanently. Aspirants must know the distinction between all these tools and when each is deployed.

External Affairs Minister S Jaishankar, speaking at the UN General Assembly on September 27, indicated that India and Canada are preparing to elevate bilateral ties to a 'higher level.' The statement marks a notable diplomatic shift after a prolonged freeze triggered by Canada's 2023 allegations linking Indian agents to the killing of Khalistani separatist Hardeep Singh Nijjar, which led to mutual expulsion of diplomats and severe strain in relations.

India-Canada relations deteriorated sharply after Canadian Prime Minister Justin Trudeau accused Indian government agents of involvement in the June 2023 killing of Hardeep Singh Nijjar, a Canadian Sikh classified by India as a terrorist. India denied the allegations and termed them 'absurd.' Both countries expelled senior diplomats, Canada suspended free trade agreement (CETA) negotiations, and bilateral engagement hit its lowest point in decades.

The relationship matters strategically for several reasons. Canada hosts one of the largest Indian diaspora populations globally — over 1.8 million people of Indian origin — and is a top destination for Indian students. Bilateral trade stood at roughly CAD 12 billion (approximately USD 9 billion) annually before the crisis. India had been negotiating the Comprehensive Economic Partnership Agreement (CEPA) with Canada, which stalled amid tensions.

Jaishankar's statement at UNGA 2025 signals a possible thaw, likely influenced by the change in Canadian political leadership: Mark Carney replaced Trudeau as Prime Minister in March 2025, and his government has adopted a less confrontational posture toward India. For exam purposes, aspirants must know the key friction points — Khalistan issue, Nijjar killing, diplomat expulsions — and the institutional frameworks that define the relationship, including CEPA negotiations, the Five Eyes intelligence alliance that Canada belongs to (India does not), and India's consistent position on non-interference in internal affairs.

Following a Washington meeting described as successful, US President Donald Trump confirmed Chinese President Xi Jinping's departure and announced a follow-up bilateral meeting in China in November 2025. Both leaders agreed to support each other's hosting of major multilateral summits in 2026: the US will host APEC and China will host the G20. The development signals a managed, if cautious, stabilisation of US-China relations after a prolonged period of tariff-driven tensions.

This event sits at the intersection of bilateral diplomacy and multilateral forum hosting — two areas the examiner tests routinely. The APEC (Asia-Pacific Economic Cooperation) forum is a 21-member regional economic grouping founded in 1989 in Canberra. The G20, established in 1999 as a finance ministers' forum and elevated to a leaders' summit in 2008, includes both the US and China as founding members, along with India.

The significance here is the reciprocal hosting commitment: the US will host APEC 2026 and China will host the G20 in 2026. This mutual endorsement is diplomatically notable because it signals that despite ongoing trade friction — including historic tariff rounds that escalated through 2024-25 — both powers see value in cooperative multilateral engagement.

For exam purposes, this news event activates several static knowledge clusters: the founding year and membership of APEC and G20, India's role in both forums (India hosted G20 in 2023 in New Delhi), the rotating presidency mechanism of the G20, and the structure of US-China bilateral relations. The examiner often uses a current bilateral or multilateral event as a hook to test whether aspirants know the founding dates, headquarters, membership count, and mandate of the institutions involved.

SEBI regulates individuals and entities that publish investment research under the Research Analyst (RA) Regulations, 2014. Registration is mandatory before any person or firm issues buy/sell recommendations on securities. SEBI assigns a unique registration number — for instance, INH300005361 denotes a Tier A individual RA. The regulator maintains a public database of all registered analysts, classifying them by entity type and tier, ensuring investor protection and accountability in securities research.

The SEBI (Research Analysts) Regulations, 2014 created a formal licensing framework for anyone who, for consideration, issues research reports or recommendations on securities. Before 2014, unregulated 'tip providers' operated freely, exposing retail investors to manipulation and conflict-of-interest risks.

Key structural features:

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This framework is part of SEBI's broader investor protection architecture, alongside regulations for Investment Advisers (IAs), Portfolio Managers, and Credit Rating Agencies.