RBI Bulletin – September 2026
Distilled Policy Brief
- India recorded a growth of 7.8 per cent in Q1:2026-27, while headline inflation rose to 4.8 per cent in August 2026 driven by food, beverages, fuel, and core components.
- Aggregate capital expenditure intended by the private corporate sector increased in 2025-26 relative to planned capex in the previous year, with the infrastructure sector led by 'Power' attracting the main share.
🎯 Prelims High-Yield Examination Points
Credit-deposit ratio measures the proportion of bank loans to aggregate deposits; modern monetary mechanisms illustrate that bank lending itself generates deposits simultaneously in the banking system.
⚖️ Mains Analytical & Syllabus Linkages
Analyze the systemic implications of persistent credit-deposit divergence on banking sector liquidity and evaluate whether traditional funding metrics adequately reflect financial vulnerability.
🎯 UPSC Prelims Practice Drill
With reference to the functioning of the banking system and credit creation as highlighted in the RBI Bulletin (September 2026), consider the following statements: 1. In the modern monetary system, banks must necessarily mobilize deposits as liabilities before they can initiate any credit creation. 2. The Credit-Deposit (CD) ratio, by itself, may not be an appropriate metric to gauge the funding vulnerability of a banking system experiencing high credit growth. 3. Profitability considerations, inter-bank mobility of deposits, and prudential regulations eventually align credit growth with underlying economic conditions. Which of the statements given above are correct?
- [A] 1 and 2 only
- [B] 2 and 3 only
- [C] 1 and 3 only
- [D] 1, 2 and 3
▶ Reveal Official Answer & Analytical Explanation
Statement 1 is incorrect because in a modern monetary system, deposits are created simultaneously when banks lend or invest; hence, banks do not necessarily need to mobilize liabilities (deposits) before extending credit. Statements 2 and 3 are correct as the RBI study notes that the CD ratio alone is not an adequate metric for funding vulnerability, and factors like profitability, inter-bank deposit mobility, and prudential regulations ultimately converge credit growth in sync with economic conditions.
🏛️ Historical Twin PYQ Anchor (2021)
Consider the following statements regarding the "National Clean Air Programme (NCAP)": 1. It is implemented by the Ministry of Environment, Forest and Climate Change. 2. Central Pollution Control Board acts as the sole regulatory executive body.