RBI Grade B — Descriptive Papers
RBI is the rare recruitment exam where descriptive writing is a paper in its own right rather than a tail on an objective one. Phase 2 asks for a policy analyst's writing: a position, a mechanism, evidence, and no padding.
Descriptive answers are typed on screen. Answer any two questions. Support your answer with data and mechanisms.
- Q1.Explain the transmission of monetary policy in India and discuss why transmission to lending rates has historically been incomplete.(15)400 words
- Q2.Discuss the trade-off between growth and inflation in the conduct of India's monetary policy.(15)400 words
- Q3.Write a precis of the passage given above in one-third of its length.(10)
One RBI Grade B Descriptive answer, from question to marked report
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Explain the transmission of monetary policy in India and discuss why transmission to lending rates has historically been incomplete.
Type it against the clock, the way the real paper is answered.
Marked in place, with every criterion scored.
Monetary policy transmission means how a change in the repo rate affects the economy. When RBI cuts the repo rate, banks should reduce their lending rates so that credit becomes cheaper and investment increases. But in India transmission has been slow. Banks do not reduce rates quickly because of high cost of deposits and NPAs.? RBI has introduced external benchmark linked lending rates to improve this. The policy rate is decided by the Monetary Policy Committee keeping in view inflation and growth. A change in the repo rate first affects the money market, where the call rate and treasury bill rates move almost immediately. From there it is expected to travel to deposit rates, lending rates, bond yields and finally to demand, output and prices. The whole process takes several quarters and by then other conditions have also changed, so the effect is difficult to measure exactly. In India the process has been weak for a long time. A large part of bank deposits is contracted for a year or more, so the cost of funds falls only slowly even after a cut. When banks are carrying bad loans they keep a wider spread to cover provisioning, and they compete for deposits instead of reducing rates. Credit demand from good borrowers is low in a slowdown, so a cut does not by itself create fresh lending. Transmission has also been observed to be faster when the rate is raised than when it is cut.
- The full set of channels, named
- Administered small savings rates as a floor on deposit repricing
- The MCLR to EBLR shift and what changed mechanically
Model answer for this question
Define transmission, then set out the channels: interest rate, credit, asset price, exchange rate and expectations. Explain the frictions: slow repricing of term deposits, administered small savings rates as a floor, capital constraints and stressed assets, and competition for deposits. Then the response: base rate to MCLR to external benchmark linked rates, and why linking to an external benchmark forces pass-through on a fixed reset cycle. Close with the residual constraint on the deposit side.
Fast enough to write, read the report and rewrite the same answer in one sitting — which is where the improvement actually comes from.
The scoring behind those pen marks: every criterion, what it was worth, what you earned, and a model answer.
The credit channel only. Interest rate, asset price, exchange rate and expectations channels complete the picture.
Two causes named without their mechanism.
EBLR named; how it changes repricing behaviour is not explained.
Clear, but conversational in places where a regulator's register is expected.
RBI Grade B Descriptive at a glance
| Conducting body | Reserve Bank of India |
|---|---|
| Mode | Typed on screen |
| Papers | 3 |
| Marking | RBI Grade B Descriptive — examiner criteria |
What RBI Grade B Descriptive sets
The papers you sit, and what each is worth.
Fully descriptive — essay, precis and reading comprehension.
Objective and descriptive components.
Objective and descriptive components.
- Marked to the RBI Grade B Descriptive scheme
- Model answer, every time
- Handwriting read from a photo
- AI viva on any topic
- Full timed papers
- Every attempt kept in your archive
- WriteA question, answered and marked.
- VivaQuestioned on Inflation targeting framework and more.
- Full paperA timed paper, one scorecard.