RBI Monetary Policy August 2026: Repo Rate, CRR, SLR, MPC Decisions and MCQs
Latest Policy Rates + MPC Composition + Inflation Targeting + GDP/Inflation Forecasts + June Comparison + 20 MCQs
Useful for Banking, SBI, IBPS, RBI, SSC, RRB, APPSC, UPSC, Railway, Insurance, Police SI and Constable examinations.
On 5 August 2026, the Reserve Bank of India announced the outcome of the 62nd meeting of the Monetary Policy Committee, held from 3 to 5 August under Governor Sanjay Malhotra. The MPC unanimously retained the policy repo rate at 5.25% and continued with a neutral stance. Consequently, the SDF rate remained 5.00%, while the MSF rate and Bank Rate remained 5.50%. RBI revised the 2026-27 real GDP growth projection upward to 6.7% and the CPI inflation projection downward to 5.0%.
The August MPC resolution directly decided the repo rate and stance. CRR and SLR are shown here as the current RBI reserve ratios; they were not announced as fresh changes in the August MPC resolution. Also, the current fixed reverse repo rate is 3.35%, but the SDF at 5.00% is the operative floor of the policy corridor.
August 2026 Monetary Policy Decisions at a Glance
| Item | August 2026 Decision / Current Rate | Exam Note |
|---|---|---|
| Policy repo rate | 5.25% — unchanged | Main policy rate decided by the MPC |
| Monetary policy stance | Neutral — retained | Allows flexibility to respond to inflation and growth |
| Standing Deposit Facility | 5.00% | Operative floor of the LAF corridor |
| Marginal Standing Facility | 5.50% | Upper bound of the corridor; emergency overnight borrowing facility for banks |
| Bank Rate | 5.50% | Aligned with the MSF rate |
| Fixed reverse repo rate | 3.35% | Still displayed by RBI; do not confuse it with SDF |
| Cash Reserve Ratio | 3.00% | Cash balance banks maintain with RBI |
| Statutory Liquidity Ratio | 18.00% | Specified liquid assets maintained by banks |
| Voting | Unanimous | All six members supported the hold decision |
| Next MPC meeting | 5–7 October 2026 | Minutes of August meeting scheduled for 19 August 2026 |
Monetary Policy Committee: Composition and Members
Section 45ZB of the Reserve Bank of India Act, 1934 provides for a six-member Monetary Policy Committee. It has three members from RBI and three external members appointed by the Central Government. The RBI Governor is the ex-officio Chairperson. The Committee determines the policy rate required to achieve the inflation target.
Sanjay Malhotra
RBI Governor and ex-officio Chairperson of the MPC.
Poonam Gupta
Deputy Governor in charge of monetary policy and an internal MPC member.
Indranil Bhattacharyya
RBI officer nominated by the Central Board and an internal MPC member.
Nagesh Kumar
External member appointed by the Central Government.
Saugata Bhattacharya
External member appointed by the Central Government.
Ram Singh
External member appointed by the Central Government.
Each member has one vote. Decisions are taken by majority. In the event of a tie, the RBI Governor has a casting vote. The August 2026 decision did not require a casting vote because the hold decision was unanimous.
Repo, Reverse Repo, SDF, MSF, CRR and SLR Explained
| Term | Simple Meaning | Likely Monetary Effect |
|---|---|---|
| Repo Rate | Rate at which RBI provides short-term funds to eligible banks against eligible collateral. | A cut generally eases monetary conditions; a hike generally tightens them. |
| Reverse Repo | A transaction through which RBI absorbs liquidity from banks against collateral. The fixed reverse repo rate shown by RBI is 3.35%. | Historically used as the corridor floor; SDF now performs that operative role. |
| SDF | Standing Deposit Facility through which eligible entities place overnight deposits with RBI without collateral. | Absorbs liquidity and forms the operative floor of the corridor. |
| MSF | Emergency overnight borrowing window for scheduled commercial banks, normally at a rate above repo. | Forms the upper end of the policy corridor. |
| CRR | Percentage of a bank's net demand and time liabilities maintained as cash balance with RBI. | Higher CRR reduces lendable funds; lower CRR releases liquidity. |
| SLR | Percentage maintained in specified liquid assets such as cash, gold and approved securities. | Supports liquidity and prudential requirements; affects funds available for lending. |
Policy Corridor Memory Flow
Move upward by 25 basis points: SDF 5.00% → Repo 5.25% → MSF/Bank Rate 5.50%. Then remember reserves separately: CRR 3% and SLR 18%.
Inflation Targeting Framework in India
India follows a flexible inflation-targeting framework. The primary objective of monetary policy is to maintain price stability while keeping in mind the objective of growth. The target is based on headline Consumer Price Index inflation, not WPI inflation.
If average CPI inflation remains above 6% or below 2% for three consecutive quarters, it constitutes failure to meet the inflation target under the statutory framework. RBI must then explain the reasons, proposed remedial actions and the estimated time required to return inflation to target.
Effect of the Repo Rate on Loans, Deposits and Inflation
When Repo Rate Falls
- Bank funding conditions may become easier.
- Floating lending rates may decline over time if transmission occurs.
- EMIs may reduce for eligible floating-rate borrowers.
- Deposit rates may also soften as banks reassess funding costs.
- Demand and investment may rise, but excessive easing can increase inflation pressure.
When Repo Rate Rises
- Borrowing costs generally move upward over time.
- Loan growth and interest-sensitive demand may moderate.
- Deposit rates may rise as banks compete for funds.
- Higher rates can help cool demand-side inflation.
- Growth may slow if financial conditions become too tight.
Latest RBI GDP Growth Projections
| Period | August 2026 Projection | June 2026 Projection | Change |
|---|---|---|---|
| 2026-27 | 6.7% | 6.6% | Raised by 0.1 percentage point |
| Q1:2026-27 | 7.0% | 6.6% | Raised by 0.4 percentage point |
| Q2:2026-27 | 6.4% | 6.3% | Raised by 0.1 percentage point |
| Q3:2026-27 | 6.5% | 6.5% | No change |
| Q4:2026-27 | 6.8% | 6.8% | No change |
| Q1:2027-28 | 7.3% | Not stated in the June resolution table | New forward projection in August |
RBI cited resilient private consumption, investment, construction and capital-goods indicators, credit flow, infrastructure spending and exports as support for growth. Risks remain from global turbulence, energy prices, supply-chain pressures, monsoon conditions and trade-policy uncertainty.
Latest RBI Inflation Projections
| Period | August 2026 Projection | June 2026 Projection | Change |
|---|---|---|---|
| 2026-27 CPI inflation | 5.0% | 5.1% | Lowered by 0.1 percentage point |
| Q1:2026-27 | Actual outcome around 4.4% | 4.2% projection | August policy discussed the realised Q1 outcome |
| Q2:2026-27 | 4.7% | 5.1% | Lowered by 0.4 percentage point |
| Q3:2026-27 | 5.9% | 5.9% | No change |
| Q4:2026-27 | 5.5% | 5.4% | Raised by 0.1 percentage point |
| Q1:2027-28 | 5.3% | Not stated in the June resolution table | New forward projection in August |
| Core inflation, 2026-27 | 4.3% | 4.7% | Lowered by 0.4 percentage point |
Official data placed June 2026 headline CPI inflation at 4.38%, which RBI rounded to 4.4%. RBI said the increase was mainly due to food and fuel, while core inflation remained moderate. The central bank projected inflation to peak in Q3 before moderating, but warned about food, fuel, input-cost, monsoon and geopolitical risks.
June 2026 vs August 2026 Policy Comparison
| Indicator | June 2026 Policy | August 2026 Policy |
|---|---|---|
| MPC meeting number | 61st | 62nd |
| Repo rate | 5.25% — unchanged | 5.25% — unchanged |
| Stance | Neutral | Neutral |
| Voting | Unanimous hold | Unanimous hold |
| 2026-27 GDP forecast | 6.6% | 6.7% |
| 2026-27 CPI forecast | 5.1% | 5.0% |
| Core inflation forecast | 4.7% | 4.3% |
| Main concern | West Asia conflict, energy prices, supply chains and deficient monsoon risk | Food and fuel pressures, El Niño/monsoon uncertainty, geopolitics and global trade policy |
Why Did RBI Keep the Repo Rate Unchanged?
- Headline inflation had moved above the 4% target and was expected to rise further in the near term.
- The rise was mainly supply-driven through food and fuel, rather than broad-based demand pressure.
- Core inflation excluding precious metals remained benign, indicating contained demand pressure.
- Growth remained resilient, supported by domestic demand, manufacturing, services and exports.
- Uncertainty remained high because of the monsoon, El Niño, oil prices, geopolitics and global trade policy.
- The MPC preferred to wait for greater clarity before recalibrating policy rates.
Static GK: RBI and Monetary Policy
| Exam Point | Correct Information |
|---|---|
| RBI established | 1 April 1935 |
| RBI nationalised | 1 January 1949 |
| Headquarters | Mumbai, Maharashtra |
| RBI Act | Reserve Bank of India Act, 1934 |
| MPC legal provision | Section 45ZB of the RBI Act |
| Inflation target provision | Section 45ZA of the RBI Act |
| Publication of MPC minutes | Section 45ZL framework; minutes are generally released after the meeting as notified by RBI |
| Targeted inflation index | Headline CPI (Combined) |
| MPC strength | Six members |
| External members | Three, appointed by the Central Government |
| Internal members | Three from RBI, including the Governor |
| Basis-point conversion | 100 basis points = 1 percentage point |
Do Not Confuse
Quick Revision
- RBI announced the August 2026 policy on 5 August 2026.
- The MPC meeting was held from 3 to 5 August 2026.
- It was the 62nd meeting of the MPC.
- Repo rate remained 5.25%.
- The policy stance remained neutral.
- SDF remained 5.00%.
- MSF and Bank Rate remained 5.50%.
- Fixed reverse repo was 3.35%.
- CRR was 3.00% and SLR was 18.00%.
- GDP growth for 2026-27 was projected at 6.7%.
- CPI inflation for 2026-27 was projected at 5.0%.
- Q3 inflation was projected at 5.9%.
- June 2026 CPI inflation was 4.38%, rounded by RBI to 4.4%.
- The MPC has six members.
- India's CPI inflation target is 4%, with a 2%–6% tolerance band.
- August MPC minutes are scheduled for 19 August 2026.
- The next MPC meeting is scheduled for 5–7 October 2026.
20 MCQs
1. What did the RBI MPC decide on 5 August 2026 regarding the policy repo rate?
2. What monetary policy stance was retained in the August 2026 review?
3. The August 2026 RBI monetary policy meeting was which numbered meeting of the MPC?
4. Who chaired the August 2026 MPC meeting?
5. What was the Standing Deposit Facility rate after the August 2026 decision?
6. What were the MSF rate and Bank Rate after the August 2026 policy?
7. What was the current Cash Reserve Ratio shown by RBI on 5 August 2026?
8. What was the current Statutory Liquidity Ratio shown by RBI on 5 August 2026?
9. Which rate is the operative floor of the RBI's liquidity adjustment facility corridor?
10. What was the fixed reverse repo rate displayed by RBI in August 2026?
11. What real GDP growth did RBI project for 2026-27 in August 2026?
12. What CPI inflation did RBI project for 2026-27 in August 2026?
13. In which quarter did RBI project 2026-27 CPI inflation to peak at 5.9%?
14. What was India's June 2026 headline CPI inflation according to official data?
15. Under India's flexible inflation-targeting framework, the numerical CPI target is:
16. How many members are there in India's Monetary Policy Committee?
17. Which statement best describes the repo rate?
18. A repo-rate cut, other things remaining equal, generally tends to:
19. Which of the following is maintained by banks with the RBI as cash?
20. When are the minutes of the August 2026 MPC meeting scheduled to be published?
Frequently Asked Questions
What is the RBI repo rate after the August 2026 policy?
The policy repo rate is 5.25%. The MPC unanimously retained it at this level on 5 August 2026.
Did RBI change CRR or SLR in the August 2026 MPC decision?
The MPC resolution did not announce a fresh change in CRR or SLR. RBI's current-rates panel showed CRR at 3.00% and SLR at 18.00%.
What is the difference between SDF and reverse repo?
SDF absorbs overnight liquidity without collateral and is the operative floor of the policy corridor. The fixed reverse repo involves collateral and remains displayed at 3.35%, but it is not the current operative floor.
Why did RBI not cut the repo rate despite resilient growth?
Inflation was projected to rise in the near term and uncertainty remained high regarding food, fuel, monsoon, El Niño, geopolitics and global trade. The MPC preferred to wait for greater clarity.
Which inflation measure does the MPC target?
The MPC targets headline Consumer Price Index inflation, with a central target of 4% and a tolerance band of 2% to 6%.
Does an unchanged repo rate mean all loan EMIs remain unchanged?
Not necessarily. Banks can revise lending rates because of benchmark reset dates, funding costs, liquidity, credit risk and competition. Fixed-rate loans generally do not change because of a repo decision during the fixed-rate period.
Related Learn With Mahesh Links
- Banking Awareness Posts
- Indian Economy Posts
- Current Affairs Posts
- MCQ Practice Posts
- Learn With Mahesh Homepage
Official Sources
- RBI – Monetary Policy Statement, 2026-27: Resolution of the MPC, 3–5 August 2026
- RBI – Monetary Policy Statement, 2026-27: Resolution of the MPC, 3–5 June 2026
- RBI – Current Policy Rates and Reserve Ratios
- PIB, Ministry of Finance – Statutory Monetary Policy Framework and Inflation Target
- MoSPI/PIB – Consumer Price Index for June 2026
Last fact-checked: 5 August 2026.
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