 | | | Volume XXII | Issue 3 | June 2026
MONETARY & CREDIT INFORMATION REVIEW |  | | | | | | Note from the Editor The June 2026 issue of the Monetary and Credit Information Review captures a pivotal juncture where domestic resilience confronts heightened global turbulence. As articulated by Governor Shri Sanjay Malhotra following the Monetary Policy Committee meeting held from June 3 to 5, 2026, the Indian economy enters this phase of geopolitical stress and supply chain disruptions with fundamentally stronger footing than in previous episodes. While the MPC unanimously voted to maintain the policy repo rate at 5.25 per cent and retain a neutral stance amidst uncertainties regarding the West Asia conflict and a sub-normal monsoon forecast, the underlying macroeconomic indicators reflect robustness. With real GDP growth projected at 6.6 per cent for 2026-27 and the financial system demonstrating remarkable resilience as per the latest Financial Stability Report (June 2026), this edition delves into the strategic policy calibration required to navigate inflationary pressures while the sustaining growth momentum. 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 June 5, 2026 Governor Shri Sanjay Malhotra announced the decisions of the Monetary Policy Committee (MPC) on June 5, 2026, highlighting that the Indian economy entered the current episode of global turbulence with much better fundamentals than in previous similar episodes. The Monetary Policy Committee (MPC) met on the 3rd, 4th and 5th of June 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 keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 5.25 per cent; consequently, the standing deposit facility (SDF) rate remains at 5.00 per cent and the marginal standing facility (MSF) rate and the Bank Rate at 5.50 per cent. The MPC also decided to continue with the neutral stance. The global economic environment has deteriorated due to the continuing geopolitical impasse in West Asia, with sharply escalating energy prices and global supply chain disruptions hindering economic activity. While domestic demand remains resilient and manufacturing and services sectors activity continue to expand, there are incipient signs of moderation in some sectors. The MPC was of the opinion that considerable risks to the baseline assessment of inflation and growth remain due to the uncertainty about the duration of the conflict and the pace of supply chain restoration. Additionally, the food outlook remains uncertain on account of a sub-normal south-west monsoon forecast and El Niño risks. India’s real GDP growth was placed at 7.6 per cent in 2025-26, owing to strong expansion in private consumption and fixed investment, with robust performance in manufacturing and services. High-frequency indicators suggest domestic economic activity has remained largely steady, and merchandise exports recorded strong growth despite elevated freight and insurance costs. However, going ahead, the rise in prices of energy and other inputs is likely to weigh on economic activity. Taking all factors into consideration, real GDP growth for 2026-27 is projected at 6.6 per cent, with Q1 at 6.6 per cent, Q2 at 6.3 per cent, Q3 at 6.5 per cent, and Q4 at 6.8 per cent. Headline CPI inflation remained below the target during March and April 2026 at 3.4 per cent and 3.5 per cent, respectively, while core inflation remained stable at 3.7 per cent. However, the partial pass-through of high global crude oil prices, which averaged around US$ 110/barrel during April-May 2026, to domestic pump prices started in May. Prices of several inputs like commercial LPG, industrial raw materials, and base metals have increased, which could exert upward pressure on CPI inflation. Considering all these factors, CPI inflation for 2026-27 is projected to be at 5.1 per cent with Q1 at 4.2 per cent; Q2 at 5.1 per cent; Q3 at 5.9 per cent; and Q4 at 5.4 per cent. System liquidity stood at an average daily surplus of ₹2.63 lakh crore since the last MPC meeting in April 2026, and the Reserve Bank proactively undertook liquidity measures to ensure appropriate liquidity in the banking system. Credit from all sources grew robustly by 15.4 per cent (y-o-y) in 2025-26, and the system-level financial parameters related to capital adequacy, liquidity, and asset quality of Scheduled Commercial Banks (SCBs) and NBFCs continue to remain healthy. In the external sector, while persistent trade policy uncertainties pose upside risks to the current account deficit, India’s foreign exchange reserves stood at a healthy US$ 682.3 billion as of May 29, 2026, adequate in terms of the standard metrics of reserve adequacy including import cover (about 11 months) and external debt (89.1 per cent). To read the full statement, please click here. Minutes of MPC The 61st Meeting of the Monetary Policy Committee, constituted under Section 45ZB of the Reserve Bank of India Act, 1934, was held during June 3 to 5, 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 June 19, 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. To read more, please click here. II. Regulation RBI invites comments on the draft “Reserve Bank of India (Interest Rate on Deposits) Amendment Directions, 2026 In order to provide greater flexibility to banks for pricing their Rupee bulk deposits, while ensuring uniformity in disclosure of interest rates on deposits, the Reserve Bank of India on June 5, 2026 released the following draft Amendment Directions: I. Reserve Bank of India (Commercial Banks – Interest Rate on Deposits) Amendment Directions, 2026 II. Reserve Bank of India (Small Finance Banks – Interest Rate on Deposits) Amendment Directions, 2026 III. Reserve Bank of India (Regional Rural Banks – Interest Rate on Deposits) Amendment Directions, 2026 IV. Reserve Bank of India (Payment Banks – Interest Rate on Deposits) Amendment Directions, 2026 V. Reserve Bank of India (Local Area Banks – Interest Rate on Deposits) Amendment Directions, 2026 VI. Reserve Bank of India (Urban Co-operative Banks – Interest Rate on Deposits) Amendment Directions, 2026 The comments / feedback on the draft Amendment Directions were sought by the regulated entities and members of public/other stakeholders on or before June 20, 2026, through the following channels: i. the ‘Connect 2 Regulate’ section on the website by following the corresponding hyperlink provided against each document in the page where they are hosted; or ii. by email with the subject line 'Feedback on (full name of the draft Amendment Directions (including the type of Regulated Entity))’. To read more, please click here. RBI issues Final Amendment Directions on Lending to Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) The Reserve Bank had, on February 13, 2026, issued draft Amendment Directions for instructions on ‘Lending to Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs)’, seeking feedback from stakeholders. The draft Amendment Directions proposed to permit commercial banks to extend finance to REITs, subject to appropriate prudential safeguards including regulatory ceiling for exposure to REITs. The existing guidelines on lending to InvITs (applicable to commercial banks, small finance banks and All India Financial Institutions) were also proposed to be harmonised with the prudential safeguards for lending to REITs. Feedback received on the above draft Directions has been examined and the consequent modifications, as decided by the Reserve Bank, have been suitably incorporated in the Final Amendment Directions. A statement on the feedback received for the draft Amendment Directions was provided in the Annex. Accordingly, the Reserve Bank of India on June 10, 2026 issued the following Amendment Directions: (i) Reserve Bank of India (Commercial Banks – Credit Facilities) Third Amendment Directions, 2026 (ii) Reserve Bank of India (Commercial Banks – Concentration Risk Management) Third Amendment Directions, 2026 (iii) Reserve Bank of India (Commercial Banks - Prudential Norms on Capital Adequacy) Eighth Amendment Directions, 2026 (iv) Reserve Bank of India (Small Finance Banks – Credit Facilities) Second Amendment Directions, 2026 (v) Reserve Bank of India (All India Financial Institutions – Credit Facilities) Amendment Directions, 2026 To read more, please click here. RBI invites public comments on the draft Amendment Directions on ‘Standardised Approach for Counterparty Credit Risk (SA-CCR)’ The extant guidelines require the use of the Current Exposure Method (CEM) for the computation of Counterparty Credit Risk (CCR) exposure. In 2016, RBI issued final ‘Guidelines for Computing Exposure for Counterparty Credit Risk arising from Derivative Transactions’ and ‘Guidelines on Capital Requirements for Bank Exposures to Central Counterparties’, both based on the Standardised Approach for Counterparty Credit Risk (SA-CCR), with an intended implementation date of April 1, 2018. However, the implementation of these guidelines was subsequently deferred. Since then, the Bilateral Netting of Qualified Financial Contracts Act, 2020, has been enacted, while the margining framework has been implemented under the Reserve Bank of India (Margining for Non-Centrally Cleared OTC Derivatives) Directions, 2024. The Basel Committee on Banking Supervision (BCBS) has also, over time, issued various FAQs providing further clarity on the SA-CCR guidelines. Considering the time elapsed and the recent legal and regulatory developments, the guidelines have been comprehensively reviewed. The key changes between the 2016 guidelines (currently part of the Commercial Banks – Forthcoming Instructions, Directions, 2025) and the proposed draft Directions include, inter alia, (i) clarification on the scope of CCR across both banking and trading book exposures, (ii) treatment of multiple margin agreements and multiple netting sets elaborated in view of the legal / regulatory developments in netting and margining guidelines, (iii) guidance on the treatment of transactions where a bank acts as a clearing member of SEBI-recognised stock exchanges in the equity derivatives and commodity derivatives segments, (iv) treatment for deferment of option premium, (v) guidance on computation of effective notional for options, and (vi) inclusion of disclosure templates for SA-CCR. Accordingly, the Reserve Bank has on June 10, 2026, released the Reserve Bank of India (Commercial Banks - Forthcoming Instructions) Amendment Directions, 2026, inviting comments from Regulated Entities, market have been examined and participants, and interested parties until July 1, 2026, via the ‘Connect 2 Regulate’ section on the Bank’s website. To read more, please click here. III. Shri Sanjay Lohiya, Secretary, Department of Financial Services, nominated on RBI Central Board The Central Government has nominated Shri Sanjay Lohiya, Secretary, Department of Financial Services, Ministry of Finance, Government of India as a Director on the Central Board of Reserve Bank of India vice Shri Nagaraju Maddirala. The nomination of Shri Sanjay Lohiya is effective from June 11, 2026 and until further orders. | RBI invites comments on Harmonisation and Consolidation of Instructions on Control / Assurance Functions Reserve Bank of India has issued the following draft Amendment Directions for public comments on June 10, 2026: i. Reserve Bank of India (Commercial Banks – Governance) Second Amendment Directions, 2026 ii. Reserve Bank of India (Small Finance Banks – Governance) Second Amendment Directions, 2026 iii. Reserve Bank of India (Payments Banks – Governance) Second Amendment Directions, 2026 iv. Reserve Bank of India (Local Area Banks – Governance) Second Amendment Directions, 2026 v. Reserve Bank of India (Regional Rural Banks – Governance) Amendment Directions, 2026 vi. Reserve Bank of India (All India Financial Institutions – Miscellaneous) Amendment Directions, 2026 vii. Reserve Bank of India (Urban Co-operative Banks – Governance) Second Amendment Directions, 2026 viii. Reserve Bank of India (Rural Co-operative Banks – Governance) Second Amendment Directions, 2026 ix. Reserve Bank of India (Non-Banking Financial Companies – Governance) Amendment Directions, 2026 x. Reserve Bank of India (Credit Information Companies) Amendment Directions, 2026 xi. Reserve Bank of India (Asset Reconstruction Companies) Second Amendment Directions, 2026 The comments / feedback on the draft Amendment Directions were to be submitted by the regulated entities and members of public / other stakeholders on or before July 9, 2026. To read more, please click here. RBI issues Circular on Lead Bank Scheme The Reserve Bank of India had on February 13, 2026, issued a draft Circular on the revised guidelines of the Lead Bank Scheme, seeking feedback from the public. The feedback received on the draft circular has been examined and necessary modifications have been suitably incorporated in the final circular on Lead Bank Scheme issued on June 19, 2026. A statement on the key items of feedback received on the draft circular and action taken was provided in the Annex. RBI issues draft ‘Guidance on Regulatory Principles for Model Risk Management’ The Reserve Bank of India released the draft ‘Guidance on Regulatory principles for Model Risk Management’ on June 24, 2026, for public comments. The draft guidance is applicable to following regulated entities: i. Commercial Banks, ii. Small Finance Banks, iii. Payments Banks, iv. Local Area Banks, v. Regional Rural Banks, vi. Urban Co-operative Banks, vii. Rural Co-operative Banks, viii. All India Financial Institutions, ix. Non-Banking Financial Companies, x. Asset Reconstruction Companies, xi. Credit Information Companies Comments on the draft Guidance are invited from regulated entities, members of public and other stakeholders by July 24, 2026. To read more, please click here. RBI issues Amendment Directions on ‘review of methodology for identification of NBFC-UL and inclusion of Government owned NBFCs in NBFC-UL’ and ‘Credit/Investment Concentration Norms – Government owned NBFCs’ The Reserve Bank, vide Press Release dated April 10, 2026, had issued the draft Amendment Directions on ‘review of methodology for identification of NBFC-UL and inclusion of Government owned NBFCs in NBFC-UL’ seeking comments/ feedback from the stakeholders till May 04, 2026. These draft amendment Directions proposed (a) to replace the existing methodology for identification of NBFCs in Upper Layer (NBFC-UL) with a transparent, simple and absolute criteria, that is asset size of ₹1,00,000 crore and above, (b) to consider eligible Government owned NBFCs for inclusion in the list of NBFC-UL based on the revised criteria, (c) to allow all NBFC-UL to use State Government guarantees as credit risk transfer instrument without any limit subject to the specified conditions, and (d) other related aspects. The Bank had also invited comments on the draft Circular on ‘Credit/Investment Concentration Norms – Government owned NBFCs’ vide Press Release dated January 15, 2024. The draft circular had proposed to withdraw the exemptions granted on case-by-case basis, to Government NBFCs from credit/investment concentration norms. Comments/ feedback received on the above draft Amendment Directions and draft circular the consequent modifications, as decided by the Reserve Bank, have been suitably incorporated in the final Amendment Directions. A statement on the comments/ feedback received on the above Amendment Directions is provided in the Annex-I, and the statement on the comments/ feedback received on the above draft circular is provided in the Annex-II. 4. Accordingly, the Reserve Bank on June 24, 2026 issued, the following Amendment Directions: i. Reserve Bank of India (Non-Banking Financial Companies – Registration, Exemptions and Framework for Scale Based Regulation) Second Amendment Directions, 2026; ii. Reserve Bank of India (Non-Banking Financial Companies - Concentration Risk Management) Third Amendment Directions, 2026, iii. Reserve Bank of India (Non-Banking Financial Companies – Governance) Amendment Directions, 2026, and iv. Reserve Bank of India (Non-Banking Financial Companies – Financial Statements: Presentation and Disclosures) Second Amendment Directions, 2026. RBI issues Master Direction – Reserve Bank of India (Credit Derivatives) Directions, 2026 In pursuance of the announcement made in the Union Budget for FY 2026-27 and as stated in the Statement on Developmental and Regulatory Policies dated February 06, 2026, to enable the introduction of derivatives on credit indices and total return swaps on corporate bonds, the Reserve Bank of India had issued Draft Directions on February 6, 2026, seeking feedback from market participants, stakeholders and other interested parties. The feedback received on the draft directions has been examined and consequent modifications have been suitably incorporated in the final Master Directions issued on June 25, 2026. A statement on the major feedback received was provided in the Annex. IV. Publications Financial Stability Report The Reserve Bank released the June 2026 edition of the Financial Stability Report (FSR) on June 30, 2026 which reflects the collective assessment of the Sub-Committee of the Financial Stability and Development Council (FSDC) on the resilience of the Indian financial system and risks to financial stability. Highlights: • Despite repeated shocks, the global financial system has thus far demonstrated notable resilience, with markets remaining orderly after an initial bout of volatility following the outbreak of the West Asia conflict. • Nevertheless, global financial stability risks remain elevated. Persistent supply chain uncertainties could tighten financial conditions and revive inflationary pressures. Meanwhile, elevated public debt, bond market fragilities, stretched asset valuations, and leveraged NBFIs remain key vulnerabilities that could amplify future shocks. • India's sound macroeconomic fundamentals place it in a stronger position than many of its peers and provide greater resilience to external shocks than in past crisis episodes. • The balance of risks has turned favourable, supported by the interim peace deal and recent policy measures by the Government and the Reserve Bank aimed at strengthening capital inflows. To read more, please click here. RBI Bulletin – June 2026 The Reserve Bank released the June 2026 issue of its monthly Bulletin on June 22, 2026. The Bulletin includes one speech, one article and current statistics. The article is on the State of the Economy. State of the Economy Geopolitical tensions and trade disruptions persisted, despite the recent interim peace deal in West Asia. Amidst the challenging global environment, the Indian economy grew at 7.8 per cent in Q4:2025-26, supported by private consumption and fixed investment. High-frequency indicators during the first two months suggest sustained economic momentum in 2026-27. Despite a pick-up in May, CPI-inflation remained anchored. India’s external sector remained resilient, supported by FDI inflows and adequate foreign exchange reserves. To read more, please click here. V. Data Release & Surveys Important data and surveys released by the Reserve Bank during the month of June 2026 are as follows:
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