CURRENT AFFAIRS | 1 JUNE 2026
The Reserve Bank of India’s Monetary Policy Committee (MPC) is widely expected to defer any rate cut or hike at its June 6, 2026 meeting, persisting with a “wait-and-watch” approach as West Asia tensions cloud the inflation horizon. The current repo rate of 5.25% — the rate at which RBI lends to commercial banks — has remained unchanged through three consecutive meetings. Retail (CPI) inflation stood at 3.48% in April 2026, comfortably below the medium-term target of 4%, while wholesale inflation crossed 3.5%.
In a parallel announcement, the RBI declared a record Rs 2.87 lakh crore dividend to the Central Government for FY26 (up from Rs 2.69 lakh crore in FY25). Total income surged 26% to Rs 4.28 lakh crore, with exchange gains alone contributing Rs 1.69 lakh crore. This is the highest-ever surplus transfer in RBI’s history and gives the Centre significant fiscal headroom for FY27 capex.
⚖️ Constitutional & Statutory Framework
- RBI Act 1934 — parent statute governing the central bank
- Finance Act 2016 inserted Section 45ZB creating the Monetary Policy Committee
- MPC composition: 6 members — 3 from RBI (Governor as chair) + 3 govt-appointed external experts; Governor has casting vote
- Inflation Targeting Framework 2016: 4% CPI ± 2% tolerance band
- Tools: Repo rate, reverse repo, CRR, SLR, MSF, Open Market Operations (OMO)
🎯 CLAT 2027 Angle
RBI’s autonomy, monetary vs fiscal policy interface, MPC accountability framework, and the Section 45ZB amendment of the RBI Act are perennial CLAT-GK favourites. Combine with current data — repo rate 5.25%, dividend Rs 2.87 lakh crore, inflation 3.48% — and you have the perfect data-rich answer that examiners reward.
📊 Key Facts at a Glance
| Indicator | Value |
|---|---|
| Repo rate | 5.25% |
| CPI inflation (Apr 2026) | 3.48% |
| Inflation target | 4% ± 2% |
| FY26 dividend to Govt | Rs 2.87 lakh cr (record) |
| RBI total income FY26 | Rs 4.28 lakh cr (+26%) |
| MPC strength | 6 (3 RBI + 3 Govt) |
| Forex reserves | ~$695 bn |
🧠 Mnemonic + Landmark Cases
Mnemonic — “MPC-4±2-RBI Act 1934”: Monetary Policy Committee + 4% ±2% inflation target + parent statute RBI Act 1934.
Cases: RBI v Peerless General Finance & Investment Co. (1992) — affirmed RBI’s overarching regulatory authority. ICICI Bank v Calcutta Discount Co. (1971) — early articulation of banking supervision. Internet & Mobile Association of India v RBI (2020) — proportionality test on crypto circular.
Practice Quiz — 10 CLAT-Style Questions
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