India's policy interest rate is set by a vote, not by one person. Since September 2016 the Reserve Bank of India has fixed the repo rate through a statutory Monetary Policy Committee, and the governor votes a second time only when the six members are tied. For borrowers and depositors, that means every change in loan or deposit rates traces back to a recorded vote whose minutes are published two weeks later.
As of 13 November 2026, the repo rate is 5.50 per cent. The committee raised it by 25 basis points on 7 October 2026, in a unanimous six-to-nothing vote, and changed its stance from neutral to calibrated tightening. The next decision is due on 4 December 2026.
Who sits on the committee
The committee has six members. Three come from the central bank: the governor, who chairs it; the deputy governor in charge of monetary policy; and one officer nominated by the RBI's Central Board. The other three are outside members appointed by the Government of India for a fixed term of four years.
Sanjay Malhotra, who took over as governor in December 2024 for a three-year term, chairs the committee. Poonam Gupta is the deputy governor in charge of monetary policy, and Indranil Bhattacharyya is the Central Board's nominee. The three outside members are Nagesh Kumar, Saugata Bhattacharya and Ram Singh, appointed in October 2024.
How the committee votes and reports
Decisions are taken by majority. Each member votes separately on the policy rate, and the RBI publishes the minutes, with each member's vote and reasoning, on the fourteenth day after the meeting. The committee must meet at least four times a year; in practice it meets six times, once every two months, and the governor announces the outcome on the final day in a televised statement.
The October 2026 decision shows how this works. All six members voted for the 25-basis-point increase. On the stance, two of the outside members, Nagesh Kumar and Ram Singh, would have preferred to stay neutral, and the minutes published on 21 October 2026 record their reasons alongside the majority's.
The mandate comes from the Reserve Bank of India Act, 1934, as amended in 2016. It directs the committee to hold consumer price inflation at four per cent, with a tolerance band of two percentage points on either side. If inflation stays outside the band for three consecutive quarters, the RBI must send the government a written explanation of why, and of how it plans to bring inflation back.
The tools behind a rate decision
The committee votes on one number, the repo rate. Several other instruments decide how that number reaches the banking system, and not all of them need a committee vote.
Instrument | What it does | Who decides | Rate now |
|---|---|---|---|
Repo rate | Rate at which the RBI lends short-term funds to banks against government securities | Monetary Policy Committee | 5.50% |
Standing Deposit Facility | Lets banks park surplus cash with the RBI without giving collateral; sits 25 basis points below the repo rate | Set in relation to the repo rate | 5.25% |
Marginal Standing Facility | Emergency overnight borrowing by banks against securities; sits 25 basis points above the repo rate | Set in relation to the repo rate | 5.75% |
Bank Rate | Rate for the RBI's longer-term lending to banks; moves with the MSF rate | Set in relation to the repo rate | 5.75% |
Cash Reserve Ratio | Share of deposits banks must hold with the RBI as cash | RBI, usually announced with the policy statement | — |
Statutory Liquidity Ratio | Share of deposits banks must hold in liquid assets such as government securities | RBI | — |
What else the Reserve Bank of India controls
Monetary policy is one function among several. The RBI issues currency notes, acts as banker and debt manager to the central and state governments, and manages foreign exchange under the Foreign Exchange Management Act, 1999.
It also supervises commercial banks, cooperative banks and non-banking finance companies under the Banking Regulation Act, 1949, and oversees payment systems such as UPI under the Payment and Settlement Systems Act, 2007. Licensing, capital rules and penalties on lenders all fall to the central bank, which is why a bank can be barred from taking deposits by an RBI order without any court being involved.
From a private shareholder bank to a state-owned one
The Reserve Bank of India Act was passed in 1934, and the bank began operating in April 1935 with its head office in Calcutta. It moved to Bombay, now Mumbai, in 1937. It started as a shareholders' bank, and the Government of India took over all of its capital on nationalisation in January 1949.
Day-to-day direction rests with the Central Board of Directors, whose members are nominated by the government, alongside the governor and deputy governors. The inflation-targeting framework of 2016 is the biggest change to the bank's mandate since nationalisation: it replaced the earlier practice of weighing several goals at once with a single numerical target, set by the government in consultation with the RBI and reviewed every five years.
What to watch next
The committee's fifth meeting of the financial year runs from 2 to 4 December 2026, with the decision announced on 4 December and the minutes on 18 December. The last meeting of the year follows on 3 to 5 February 2027. Malhotra's term as governor runs to December 2027.
FAQ
Who decides interest rates in India?
The six-member Monetary Policy Committee votes on the repo rate. Three members are from the Reserve Bank of India, including the governor as chair, and three are outside members appointed by the government. The governor has a casting vote only if the members are tied.
What is the RBI repo rate now?
As of 13 November 2026 the repo rate is 5.50 per cent, after a 25-basis-point increase on 7 October 2026. The Standing Deposit Facility rate is 5.25 per cent and the Marginal Standing Facility rate is 5.75 per cent.
When is the next RBI policy announcement?
On 4 December 2026, at the end of the committee's meeting from 2 to 4 December. The meeting after that is from 3 to 5 February 2027.
Is the Reserve Bank of India owned by the government?
Yes. The Government of India took over all of the bank's capital when it was nationalised in January 1949. The Central Board of Directors that oversees it is nominated by the government.
When was the Reserve Bank of India founded?
The Reserve Bank of India Act was passed in 1934 and the bank began operating in April 1935. Its head office moved from Calcutta to Bombay in 1937.
What is the RBI's inflation target?
Consumer price inflation of four per cent, with a tolerance band of two percentage points on either side, under the Reserve Bank of India Act as amended in 2016.
