The RBI Circulars for May 2026 bring important updates for banking and finance exams such as CAIIB, JAIIB, and other regulatory certifications. These circulars cover key topics like FEMA regulations, Authorized Persons, Capital Adequacy Ratio, IFR changes, credit growth data, and new RBI frameworks. Understanding these updates is very important for exam preparation as questions are often asked directly from recent circular-based developments issued by the Reserve Bank of India. This practice quiz and PDF guide will help you revise all major concepts in a simple and structured way.
Download RBI Circulars May 2026 Practice Quiz PDF
The RBI Circulars May 2026 Practice Quiz is a revision-based MCQ set designed from the latest Reserve Bank of India (RBI) circulars, master directions, and updated regulatory guidelines issued during May 2026.
This quiz focuses on important concepts such as FEMA Authorized Person regulations, AD Category framework, Capital Adequacy Ratio (CAR), Investment Fluctuation Reserve (IFR) changes, BSR credit-deposit data, QSAFE cybersecurity initiative, and updated banking compliance rules.
| Particulars | Link |
| RBI Circular Quiz PDF | Download Free PDF |
| Check 2026 RBI Circular Details | Check Details |
Attempt the RBI Circulars May 2026 Quiz
RBI Circulars are highly important for banking and regulatory examinations as they reflect the latest policy updates issued by the Reserve Bank of India. This May 2026 quiz helps learners build strong conceptual clarity on key topics such as FEMA Authorized Person regulations, AD Category structure, Capital Adequacy Ratio (CAR), IFR reforms, BSR credit and deposit trends, and new RBI frameworks like QSAFE and liquidity management updates.
1. Under FEMA, which portal must be used by existing Authorized Persons to apply for fresh authorization after expiry?
2. Which of the following entities is eligible to apply for AD Category 1 authorization under FEMA?
3. What is the minimum net worth requirement for an AD Category 2 entity?
4. An FFMC (Full-Fledged Money Changer) operating multiple branches must have a minimum net worth of:
5. Under the Fit and Proper Criteria for Authorized Persons, at least what percentage of directors/KMP must have financial sector experience?
6. How many days before its expiry must an existing Authorized Dealer submit a renewal application to RBI?
7. What is the maximum transaction limit for trade-related current account transactions permitted for AD Category 2 entities?
8. Which of the following activities is an FFMC permitted to perform under FEMA?
9. Within how many months must a newly authorized person commence operations under FEMA Authorized Person Regulations 2026?
10. A change in ownership exceeding what percentage threshold requires prior RBI approval for an authorized person?
11. Under the new outward remittance framework, what significant change has RBI introduced for non-bank entities?
12. Under the new outward remittance framework, if a fintech partner processes a remittance incorrectly, who bears regulatory responsibility?
13. The Capital Adequacy Ratio (CAR) formula is expressed as:
14. Which of the following is NOT a component of Tier 1 Capital?
15. Under the revised RBI framework, quarterly profits can be included in Tier 1 capital. What is the dividend adjustment applied while computing eligible quarterly profit?
16. The Investment Fluctuation Reserve (IFR) for commercial banks has been eliminated with effect from:
17. Why has the RBI decided to eliminate the Investment Fluctuation Reserve (IFR) for commercial banks?
18. When an existing IFR balance is dissolved for a commercial bank, it is transferred to which of the following?
19. A foreign bank operating in India through a branch mode dissolves its IFR. Which of the following is the correct treatment?
20. What is the IFR requirement for Small Finance Banks (SFBs) under the 2026 RBI circular?
Quiz Summary
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What is FEMA authorized person regulation 2026?
The FEMA Authorized Person Regulation defines who is allowed to deal in foreign exchange in India. Only entities approved by the Reserve Bank of India can buy or sell foreign currency or foreign securities. Without RBI approval, no individual or business can legally deal in foreign exchange. For example, students going abroad must purchase USD only through authorized money changers. Even existing authorized persons must renew their approval after expiry through the PRAVAA portal.
- Authorized persons are regulated under RBI permission
- Deal in foreign exchange and foreign securities
- Renewal required after expiry via PRAVAA portal
- Unauthorized forex dealing is strictly prohibited
What are the Categories of Authorized Dealers (AD)?
Authorized Dealers are classified into three categories based on their size, financial strength, and RBI approval conditions. Each category has different operational limits and eligibility criteria.
| Category | Eligible Entities | Key Features |
| AD Category 1 | RBI licensed banks | Full forex operations, both current and capital account |
| AD Category 2 | Banks, NBFCs, FFMCs | Limited forex transactions with conditions |
| AD Category 3 | Fintech & other entities | Restricted activities as per RBI approval |
Note:
- AD Category 1 has highest authority
- AD Category 2 has transaction limits
- AD Category 3 works under strict RBI conditions
- FFMCs must meet turnover and net worth norms
What are the Net Worth and Eligibility Conditions for AD?
To operate as an Authorized Dealer, RBI has defined strict eligibility rules. These ensure only financially stable and compliant institutions can handle foreign exchange operations.
| Category / Condition | Requirement / Details |
| Company Type | Must be registered under Companies Act, 2013 |
| MOA Requirement | Memorandum of Association must include foreign exchange business activity |
| Net Worth Rule | Minimum net worth varies by category |
| Fit and Proper Criteria | Checked by RBI (includes integrity, experience, and financial background) |
| AD Category 2 | Minimum net worth: ₹10 crore |
| AD Category 3 | Minimum net worth: ₹2 crore |
| FFMC (Single Branch) | Minimum net worth: ₹25 lakh |
| FFMC (Multiple Branch) | Minimum net worth: ₹50 lakh |
What is Capital Adequacy Ratio (CAR) in RBI Circulars?
Capital Adequacy Ratio is a key banking stability measure that shows whether a bank has enough capital to cover its risk-weighted assets. It ensures financial safety and reduces risk of bank failure.
- Explanation: CAR includes Tier 1 and Tier 2 capital. It is calculated using risk exposure of banks. RBI uses this ratio to maintain banking system stability. Even Small Finance Banks and Payment Banks must follow CAR norms.
- Formula – CAR = Capital / Risk Weighted Assets
- Key Components
- Tier 1 Capital (CET1 + AT1 bonds)
- Tier 2 Capital (subordinated debt, reserves)
What are the IFR Changes in RBI Circular May 2026?
Investment Fluctuation Reserve (IFR) rules have been significantly updated. RBI has removed IFR requirements for commercial banks and simplified rules for other banking institutions. This is a major reform in investment risk management.
- Key Concept – IFR was earlier used as a buffer against investment value fluctuations. Now, it is mostly removed or adjusted into reserves.
- IFR Applicability Table
| Institution | IFR Requirement |
| Commercial Banks | NIL |
| Local Area Banks | NIL |
| Small Finance Banks | 2% of AFS + FVTPL |
| Payment Banks | 2% of AFS + FVTPL |
| Regional Rural Banks | 2% of HFT + AFS |
| Urban Cooperative Banks | 5% |
| Rural Cooperative Banks | 5% |
- Key Points –
- IFR removed for commercial banks
- Existing IFR shifted to reserves or P&L
- Foreign banks cannot repatriate IFR funds
- Cooperative banks have higher IFR requirements
What is the outward remittance framework update?
RBI has simplified the outward remittance process for non-bank entities. Earlier, approvals were required, but now direct tie-ups with banks are allowed.
- Key Changes
- No RBI approval required for tie-ups
- Non-bank entities can directly work with AD Category 1 banks
- Compliance responsibility lies with institutions
- Transparency in exchange rate and charges is mandatory
- Restrictions
- Only non-trade current account transactions allowed
- No import/export trade transactions permitted
What is RBI QSAFE Committee?
The Quantum Secure Adaptive Financial Ecosystem (QSAFE) is a newly formed RBI committee focusing on cybersecurity in the banking sector. It is designed to protect financial systems from quantum computing threats.
- Objectives
- Strengthen cryptographic systems
- Prevent cyber risks from quantum computing
- Improve banking cybersecurity framework
- Submit report within 6 months
- Key Point – Quantum computing can break traditional encryption, making this committee highly important for future banking security.
What are RBI BSR-1 and BSR-2 data highlights?
RBI has released important credit and deposit growth data under BSR reports. These are frequently asked in competitive exams.
| Particulars | Details |
| Credit Growth (BSR-1) | – Overall credit growth: 14.1% – Agriculture: 14.4% (highest) – Personal loans: 12.9% – Industry: 12% – Private banks credit growth: 12.3% |
| Deposit Growth (BSR-2) | – Overall deposits: 11.5% – Term deposits: 61.6% – Savings deposits: 28.7% – Current deposits: 9.6% |
FAQs
It defines entities allowed by RBI to deal in foreign exchange and foreign securities.
They are Authorized Dealer classifications: AD Category 1, 2, and 3 for forex operations.
AD Category 2 requires a minimum net worth of ₹10 crore.
CAR is the ratio of a bank’s capital to its risk-weighted assets.
Commercial banks and local area banks no longer require IFR maintenance.
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