 | | | Volume XXII | Issue 7 | October 2026
MONETARY & CREDIT INFORMATION REVIEW |  | | | | | |
Note from the Editor This issue of the Monetary & Credit Information Review presents the Reserve Bank's principal policy and engagement events of the month. The Monetary Policy Committee, in its fourth bi-monthly meeting of 2026-27 held on October 5–7, 2026, unanimously increased the policy repo rate by 25 bps to 5.50 per cent, with the SDF rate at 5.25 per cent and the MSF rate and Bank Rate at 5.75 per cent, and changed the stance to calibrated tightening, as announced by Governor Shri Sanjay Malhotra on October 7, 2026. The 625th meeting of the Central Board, held at Chennai on October 30, 2026 under the Governor's chairmanship, deliberated on prevailing economic conditions, assessed risks to the outlook, and reviewed the working of DICGC and select Central Office Departments, with Deputy Governors and Directors in attendance. The 36th Conference of State Finance Secretaries, held at Mumbai on October 27, 2026 on the theme 'Role of Quality of Expenditure, Effective Cash and Prudent Debt Management in Enhancing States' Fiscal Sustainability', was inaugurated by the Governor, who urged States to maintain the quality of expenditure, adopt prudent borrowing and efficient cash management practices, onboard onto ULI, use P-CBDC for DBT and make effective use of the SLBC forum. We remain committed to our goal of sharing accurate information and fostering deeper understanding. The MCIR can be accessed at https://mcir.rbi.org.in as well as by scanning the QR Code. We welcome your feedback at mcir@rbi.org.in. Brij Raj
Editor | I. Monetary Policy Governor’s Monetary Policy Statement on October 7, 2026 The sudden reescalation of the West Asia conflict in September and the consequent hardening and volatility in global crude prices soured global economic sentiments and heightened financial market volatility. Although global growth remains resilient, it is projected to decelerate in 2026 from the previous year. Driven by escalating energy costs and rising food prices, global inflation is projected to increase sharply prompting monetary policy tightening by major central banks. Lingering trade uncertainty, rising bond yields in advanced economies and an appreciating dollar are keeping global financial market sentiments nervous and fragile. Further tightening of global financial conditions, uncertainty about fair valuation of AI stocks, and an elusive resolution of the West Asia conflict pose significant downside risks to the global economic outlook. In this global backdrop, the Monetary Policy Committee (MPC) met on 5th, 6th and 7th of this month to deliberate and decide on the policy repo rate. After a detailed assessment of the evolving macroeconomic and financial developments and the outlook, the MPC voted unanimously to increase the policy repo rate under the liquidity adjustment facility (LAF) by 25 bps to 5.50 per cent. Consequently, the standing deposit facility (SDF) rate stands adjusted at 5.25 per cent and the marginal standing facility (MSF) rate and the Bank Rate at 5.75 per cent. The MPC also decided to change the stance to calibrated tightening. I shall now briefly set out the rationale for these decisions. The MPC noted that the global context on account of geopolitical developments remains challenging. Nonetheless, the Indian economy has been strong, and the economic momentum remains broad-based. Moreover, the economy is expected to remain resilient. It further observed that in light of available data, it is clear that inflation and its outlook are not benign as they were last year, with headline CPI inflation expected to average almost 5.8 per cent in the next three quarters and core inflation projected at 4.4 per cent this financial year. In this milieu, recalibrating the policy rate is imperative. As regards supply side inflation, the MPC noted that monetary policy primarily acts by curtailing second round effects (inflation expectations and firm level pricing behaviour, etc.), which take time to manifest and are difficult to extract from available data. Apart from data related to inflation expectations and firm level pricing behaviour, indicators of generalisation of inflation like core inflation and diffusion indices are used for this purpose. It may, however, be kept in mind that it is difficult to distinguish between the second-round effects and the indirect impact of supply side pressures (in production cost through energy and other inputs) as both are present in these indicators. While there is some evidence of elevated inflation expectations and generalisation of inflation, there are limited signs of supply side pressures getting embedded in pricing behaviour. Similarly, while there is limited evidence of demand side pressures, risks in view of strong growth in monetary and credit aggregates exist. Considering all these factors, the MPC unanimously voted to increase the policy repo rate by 25 basis points to 5.50 per cent. The MPC also decided to change the stance to calibrated tightening. It underscored that given the current conditions, rate cuts are off the table in the near term and policy action ahead can only be a rate hike or a pause, depending on the evolving conditions and the outlook. The duration and extent of the rate hike cycle would be contingent on the actual growth-inflation developments and outlook, especially that of underlying inflation, the extent of broadening of price pressures and second round effects of the supply shock, as also the impact of demand impulses. To read the full statement, please click here. Statement on Developmental and Regulatory Policies Regulation 1. Measures to Enhance the Customer Convenience through the Account Aggregator Framework With an objective to enhance customer convenience, it has been decided to implement interoperability among NBFC-Account Aggregators (NBFC-AA). This will enable customers to access and share their financial information, across different Financial Information Providers through any NBFC-AA of their choice. Additionally, Depositories regulated by the Securities and Exchange Board of India are being facilitated to include information related to bank deposit accounts in their Consolidated Account Statement (CAS) through the NBFC-AAs. This will enable demat account holders to view information relating to their demat account holdings and bank deposit accounts at one place in the CAS. Customers, including those who do not have demat accounts, can continue to obtain a consolidated view of their financial information and share the same through the NBFC - AAs also. Both measures aim to enhance customer convenience and are expected to be implemented by December 31, 2026. Financial Markets 2. Constitution of a Technical Consultative Committee for Financial Markets Against the backdrop of rapidly evolving financial markets and infrastructure, the Reserve Bank has decided to constitute a Technical Consultative Committee for Financial Markets. The Committee will serve as a forum for structured engagement with market participants and stakeholders by the Reserve Bank on policy and operational matters related to money, government securities and foreign exchange markets as well as the respective derivative markets and infrastructure. The composition and the terms of reference for the Technical Consultative Committee shall be separately notified. Minutes of MPC The 63rd Meeting of the Monetary Policy Committee, constituted under Section 45ZB of the Reserve Bank of India Act, 1934, was held during October 5 to 7, 2026. Accordingly, under Section 45ZL of the Reserve Bank of India Act, 1934, the Reserve Bank published the minutes of the proceedings of the meeting on October 21, 2026, i.e., the fourteenth day after meeting of the MPC. In the light of evolving developments on the global and domestic front, the MPC reviewed in detail the staff’s macroeconomic projections that included inputs from survey results and stakeholder consultations. The MPC also reviewed alternative scenarios around various risks to the outlook. Drawing on the above and after extensive discussions on the stance of monetary policy, the MPC adopted the resolution that is set out below. To read more, please click here. II. Regulation RBI issues Directions on 'Credit Valuation Adjustment (CVA) Framework’ The Reserve Bank of India had issued draft Directions on the ‘Credit Valuation Adjustment (CVA) Framework’ on August 7, 2026, inviting feedback from stakeholders until August 28, 2026. The draft Directions proposed modifications to the instructions on capital charge for CVA risk for commercial banks. Key revisions included: (i) allowing eligible banks to choose a simpler approach; (ii) increasing the sensitivity of supervisory risk weights for counterparties by sector and credit quality; (iii) clarifying the eligibility and recognition of CVA hedges; and (iv) separate systematic and idiosyncratic CVA risk components in the full Basic Approach (BA-CVA) calculation, addressing imperfect alignment of indirect CVA hedges. Feedback received on the draft instructions has been examined and consequent modifications have been suitably incorporated in the final Directions. Statement on the feedback received on the draft instructions is provided in the Annex. Accordingly, the Reserve Bank released the Reserve Bank of India (Commercial Banks – Credit Valuation Adjustment Framework) Directions, 2026 on October 7, 2026. These instructions will come into effect from April 1, 2027. RBI issues guidelines on the implementation of Leverage Ratio 2017 Standard The Reserve Bank of India had issued the draft Reserve Bank of India (Commercial Banks – Prudential Norms on Capital Adequacy) Eleventh Amendment Directions, 2026 on August 7, 2026, inviting feedback from stakeholders until August 28, 2026. The draft Amendment Directions proposed to implement the latest leverage ratio framework ('Leverage Ratio 2017 Standard') issued by the Basel Committee on Banking Supervision. Feedback received on the draft Directions has been examined and consequent modifications have been suitably incorporated in the final Amendment Directions. The statement on the feedback received on the draft Directions is provided in the Annex. Accordingly, the Reserve Bank released the Reserve Bank of India (Commercial Banks – Prudential Norms on Capital Adequacy) Eleventh Amendment Directions, 2026 on October 23, 2026. These instructions will come into effect from April 1, 2027. RBI issues Amendment Directions on 'Standardised Approach for Counterparty Credit Risk (SA-CCR)’ The Reserve Bank of India had issued draft Amendment Directions on the ‘Standardised Approach for Counterparty Credit Risk (SA-CCR)’ on June 10, 2026, inviting feedback from stakeholders until July 1, 2026. The draft Amendment Directions proposed modifications to the instructions on capital charge for counterparty credit risk as provided in Master Direction on Forthcoming Instructions for commercial banks. Key revisions included: (i) clarifying the scope of CCR for both banking and trading book exposures, (ii) addressing treatment of multiple margin agreements and multiple netting sets in light of recent legal / regulatory developments, (iii) providing guidance for transactions where a bank acts as a clearing member of SEBI-recognised stock exchanges in the equity derivatives and commodity derivatives segments, (iv) specifying the treatment for deferment of option premium, (v) offering guidance on computing effective notional for options, and (vi) including disclosure templates for SA-CCR. Feedback received on the draft instructions has been examined and consequent modifications have been suitably incorporated in the final Amendment Directions. Statement on the feedback received on the draft instructions is provided in the Annex. Accordingly, the Reserve Bank released the Reserve Bank of India (Commercial Banks – Forthcoming Instructions) Amendment Directions, 2026 on October 7, 2026. These instructions will come into effect from April 1, 2027. III. 625th Meeting of Central Board of the Reserve Bank of India The 625th Meeting of the Central Board of Directors of Reserve Bank of India was held on October 30, 2026, in Mumbai under the Chairmanship of Shri Sanjay Malhotra, Governor. The Central Board took the Integrity Pledge as part of the observance of Vigilance Awareness Week 2026. The Board in its meeting deliberated on the prevailing economic conditions and associated challenges and evaluated the potential risks to the economic outlook. The Board reviewed the activities of Deposit Insurance and Credit Guarantee Corporation and activities of select Central Office Departments of the Bank. Deputy Governors, Shri Swaminathan J., Dr. Poonam Gupta, Shri Shirish Chandra Murmu, Shri Rohit Jain, and other Directors of the Central Board, viz., Ms. Anuradha Thakur, Secretary, Department of Economic Affairs; Shri Anand Gopal Mahindra, Shri Janmejaya Kumar Sinha, Shri Syed Akbaruddin and Ms. Annie George Mathew attended the meeting. | RBI issues Reserve Bank of India (Commercial Banks – Forthcoming Instructions) Second Amendment Directions, 2026 on Minimum Capital Requirements for Operational Risk The Reserve Bank of India had issued Reserve Bank of India (Commercial Banks – Forthcoming Instructions) Directions, 2025 on November 28, 2025. Chapter IV of these Directions prescribed the Minimum Capital Requirements for Operational Risk, wherein it was specified that the effective date of implementation and indicative mapping of the components of the Business Indicator (BI) to the schedules and line items of the financial statements shall be provided in due course. Subsequently, Governor in his Statement dated October 01, 2025, announced that the revised Basel III capital adequacy framework for Commercial Banks (excluding Small Finance Banks (SFBs), Payment Banks (PBs), Regional Rural Banks(RRBs)) would come into effect from April 01, 2027. Further, post issuance of these Directions, certain additional clarifications have been issued by the Basel Committee on Banking Supervision. In view of the above developments, the Reserve Bank released the Reserve Bank of India (Commercial Banks – Forthcoming Instructions) Second Amendment Directions, 2026 on October 23, 2026 specifying the implementation date for the new Standardised Approach (‘Basel III Standardised Approach’ or ‘Basel III SA’) for minimum operational risk regulatory capital requirements, providing an indicative mapping of BI components, and incorporating additional clarifications. IV. Surveys RBI launches Quarterly Order Books, Inventories and Capacity Utilisation Survey: July – September 2026 The Reserve Bank of India has launched the 75th round of its Order Books, Inventories and Capacity Utilisation Survey (OBICUS). The survey is for the reference period July – September 2026 (Q2:2026-27). The Reserve Bank has been conducting the Order Books, Inventories and Capacity Utilisation Survey (OBICUS) of the manufacturing sector on a quarterly basis since 2008. The information collected in the survey includes quantitative data on new orders received during the reference quarter, backlog of orders at the beginning of the quarter, pending orders at the end of the quarter, total inventories with a breakup between finished goods (FG), work-in-progress (WiP) and raw material (RM) inventories at the end of the quarter, item-wise production in terms of quantity and value during the quarter vis-à-vis the installed capacity from the targeted group and the reasons for changes in production / installed capacity during the quarter. The level of capacity utilisation (CU) is estimated from these responses. The survey provides valuable input for monetary policy formulation. The survey findings are released on the website of the Bank regularly. To read more, please click here. Launching of 51st Round of Quarterly Services and Infrastructure Outlook Survey (SIOS) Q3:2026-27 The Reserve Bank has launched the 51st round of the quarterly Services and Infrastructure Outlook Survey (SIOS) for the reference period October-December 2026. The survey assesses the business situation for the current quarter (Q3:2026-27) from selected companies in the services and infrastructure sectors in India and their expectations for the ensuing quarter (Q4:2026-27) based on qualitative responses on a set of indicators pertaining to demand conditions, financial conditions, employment conditions and the price situation. The outlook on key parameters for the two subsequent quarters (Q1:2027-28 and Q2:2027-28) are also covered. To read more, please click here. Launching of 116th Round of Quarterly Industrial Outlook Survey (IOS) - Q3:2026-27 The Reserve Bank has launched the 116th round of the quarterly Industrial Outlook Survey (IOS) of the Indian manufacturing sector for the reference period October-December 2026. The survey assesses business sentiments for the current quarter (Q3:2026-27) and expectations for the ensuing quarter (Q4:2026-27), based on qualitative responses on a set of indicators pertaining to demand conditions, financial conditions, employment conditions and the price situation. The outlook on key parameters for the two subsequent quarters (Q1:2027-28 and Q2:2027-28) are also covered. The survey findings are released in summary form on the website of the Bank regularly, where identity of the respondents is not revealed. To read more, please click here. V. Reserve Bank holds 36th Conference of State Finance Secretaries The 36th Conference of State Finance Secretaries was held on October 27, 2026 at RBI, Mumbai. The theme of the Conference was ‘Role of Quality of Expenditure, Effective Cash and Prudent Debt Management in Enhancing States’ Fiscal Sustainability’. The Conference was attended by the Finance Secretaries of 27 States and three Union Territories as well as senior officials from the Ministry of Finance, Government of India, Controller General of Accounts and the Comptroller and Auditor General of India. Governor, Reserve Bank of India inaugurated the Conference. Addressing the participants, the Governor emphasised the importance of maintaining the quality of expenditure to ensure the long-term fiscal health of the States. He also emphasised on the need for the States to adopt prudent borrowing strategies and efficient cash management practices. The Governor urged the States to onboard onto the Unified Lending Interface (ULI) and utilise Programmable Central Bank Digital Currency (P-CBDC) for Direct Benefit Transfers (DBT). He also advised States to make effective use of the State Level Bankers’ Committee (SLBC) forum. During the Conference, the Governor released a Booklet titled ‘Compendium on Cash and Debt Management for State Governments’. The Booklet summarises relevant concepts, operational processes and good cash and debt management practices in a concise and accessible format. The meeting reviewed, inter alia, market borrowings by the States, short-term financial accommodation to the States from Reserve Bank, adoption of Benchmark Issuance Strategy by the States, etc. | VI. Publications RBI Bulletin – October 2026 The Reserve Bank released the October 2026 issue of its monthly Bulletin on October 23, 2026. The Bulletin includes two speeches, four articles and current statistics. The four articles are: I. State of the Economy Renewed geopolitical frictions in West Asia and supply chain disruptions have amplified inflationary pressures, prompting major central banks to raise policy rates. Elevated sovereign bond yields in advanced economies (AEs) have also brought into focus concerns about fiscal sustainability and its implications for financial stability. The Indian economy continued to demonstrate strength as evidenced by high-frequency indicators across both industry and services. II. Transmission to Lending Rates of SCBs: Price versus Composition Effects in WALR This article analyses the transmission of monetary policy to the fresh lending rates of scheduled commercial banks by decomposing variations in the weighted average lending rate (WALR) into interest rate effects and compositional effects. Using an index-number based framework on bank and sector level lending rates and loan weights, the study examines the extent to which changes in the aggregate WALR reflect changes in lending rates and shifts in credit composition. III. Performance of the NBFC Sector: Review for 2025 This article assesses the performance of the non-banking financial company (NBFC) sector up to end-December 2025. It also provides a bird’s-eye-view of India’s financial system. Employing a text-mining approach, the article also explores the extent and nature of orientation towards artificial intelligence (AI) by select NBFCs. IV. Nowcasting State-Level Economic Activity in India with Night-Time Light and Google Trends Timely measurement of state-level economic activity remains a challenge in India, as official Gross State Value Added (GSVA) data are released annually with a considerable lag. This study demonstrates how alternative data sources, specifically satellite-based night-time lights and digital search behaviour, can be used to generate high-frequency estimates of state-level economic activity. The framework is applied to three major states — Maharashtra, Karnataka and Gujarat. To read more, please click here. VII. Data Release & Surveys Important data released by the Reserve Bank during the month of October 2026 are as follows:
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