CAIIB Central Banking Syllabus 2025
The Central Banking paper of CAIIB helps bankers understand the details of the financial system the role of central banks. This paper explains how central banks have evolved over time, what functions they perform, and why they are important for a country’s growth and stability. It also focuses on the Reserve Bank of India, monetary and credit policies, foreign exchange management, and the regulation of banks and financial institutions.
In this blog, we have provided the detailed exam pattern for CAIIB Elective Paper 5, Central Banking, along with the detailed module wise syllabus.
CAIIB Paper 5 Elective Paper Central Banking Syllabus
As per the IIBF, the CAIIB exam syllabus consists of 4 compulsory papers and one elective paper, which professionals can select according to their choice. There are a total of 5 elective papers, among which Elective Paper 5 is Central Banking.
IIBF CAIIB Elective Paper 5 Central Banking Exam Pattern
The CAIIB elective paper consists of 100 questions, for a total of 100 marks, with no negative marking for incorrect answers, or answers that were not being attempted. The details CAIIB exam pattern are as follows:
| Subject | No. of Questions | Total Marks | Duration |
| Elective Paper 5 Central Banking | 100 | 100 | 2 hours |
Also: Check out the detailed CAIIB Syllabus 2025
CAIIB Elective Paper Central Banking Syllabus Details
The CAIIB Paper 5 elective paper, Central Banking, consists of 6 modules and one appendix, from which 100 questions are asked. The module-wise details are as follows:
- Module A: Rationale and Functions of Central Bank
- Module B: Central Banking in India
- Module C: Monetary and Credit Policies
- Module D: Management of Foreign Exchange Reserves and Constituents of Indian Financial Market
- Module E: Regulation, Supervision and Financial Stability
- Module F: Non-Banking Financial Companies and Primary Dealers
- Appendix
CAIIB Elective Paper 5 Central Banking Syllabus – Rationale and Functions of Central Bank
The detailed syllabus for Module A is as follows:
| Topic | Details |
| Theory and Practice of Central Banking: Evolution | – Global evolution of central banks – Reasons for proliferation of central banks – Conflicting roles & responsibilities of central banks – Development of central banks in developed and developing countries |
| Functions of Central Banks | – Banker to Government – Banker to Banks – Lender of Last Resort – Monetary policy functions – Currency issue and management – Payment and settlement systems – Maintaining internal value of money – Maintaining external value of currency – Regulation, facilitation & supervision of financial system – Ensuring financial stability – Promotional functions for growth & national objectives – Development of financial markets & institutions – Central bank communication policies |
| Contemporary Issues in Central Banking | – Autonomy and independence of central bank – Credibility of central bank – Accountability of central bank – Transparency in operations – Conflict with fiscal policies |
CAIIB Elective Paper 5 Central Banking Syllabus – Central Banking in India
The detailed syllabus for Module B is as follows:
| Topic | Details |
| Reserve Bank of India | – Organizational evolution – Structure and governance – Major organizational & functional developments over time – RBI Act 1934: salient features & comments |
| Central Banking: Indian Specific Issues | – Banking Regulation Act – FEMA (Foreign Exchange Management Act) – Banking Ombudsman Scheme, 2006 – Financial sector reforms – Other financial regulators & division of functions – Institutions set up by RBI |
| Financial Inclusion and Development | – Impediments to financial inclusion – Role of policy interventions (mandates & subventions) – Building institutional & financial structure using digital technology – Focus on payment & settlement systems vs. extension of credit – Issues & possible resolutions – Financial inclusion & Financial Inclusion Plans |
CAIIB Elective Paper 5 Central Banking Syllabus – Monetary and Credit Policies
The detailed syllabus for Module C is as follows:
| Topic | Details |
| Monetary Policy | – Theoretical underpinnings – Objectives of monetary policy – Reconciling dual objectives – Rules vs. discretion – Indicators & instruments of policy – SLR & selective credit controls – Policy transmission mechanisms & channels – Transparency & policy lags – Process of monetary policy formulation in India – Conduct during large capital inflows (2000s) – Recent initiatives for strengthening policy formulation |
| Credit Policy | – Theoretical underpinnings – Nominal vs. real credit – Credit allocation mechanisms – Instruments of credit control – Margin requirements – Credit rationing (credit ceiling) – Credit pricing (setting lending rates) |
| Fiscal-Monetary Relations | – India’s monetary-fiscal relations – Balance between inflation & growth – Trends in central & state government finances (2020–22) – Constitution & recommendations of Fifteenth Finance Commission – Grants-in-aid & fiscal roadmap/rules |
| Liquidity Management in the System | – Theoretical framework of LAF – Genesis & evolution of LAF – Expert Committee recommendations – Revised framework & strategies – Instruments of LAF – Open market operations – Liquidity management during COVID-19 – RBI measures (including April 2022 policy) – Money, G-sec, corporate bond & equity market liquidity conditions |
CAIIB Elective Paper 5 Central Banking Syllabus – Management of Foreign Exchange Reserves and Constituents of Indian Financial Market
The detailed syllabus for Module D is as follows:
| Topic | Details |
| Management of Foreign Exchange Reserves | – Legal framework – Risk management – Operational risk & control system – Transparency & disclosures – Movement & sources of accretion to reserves – Adequacy of reserves – Management of gold reserves – Investment pattern of Foreign Currency Assets (FCA) – Other related aspects |
| Constituents of Indian Financial Market | – Genesis of financial market development – Structure & growth of Indian financial markets – Money market – Government securities market – Foreign exchange market – Reforms: 1990s–2010 – Post-reform foreign exchange market developments – Financial benchmarks – transparency & governance – Roadmap for LIBOR transition |
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CAIIB Elective Paper 5 Central Banking Syllabus – Regulation, Supervision and Financial Stability
The detailed syllabus for Module E is as follows:
| Topic | Details |
| Evolution of Regulation and Supervision | – Global backdrop & theoretical underpinnings – Interaction between monetary & regulatory policies – Integration vs. separation of functions – Genesis of bank regulation & supervision in India – Compatibility of monetary policy with regulation in India |
| Scheduled Commercial Banks | – Evolution (1950–1969, 1969–1991, post-1991 reforms) – Prudential requirements – Risk management (liquidity, interest rate, currency risk) – Regulatory & supervisory policies – Recent performance & developments (2021) |
| Co-operative Banks | – Growth of cooperative banking system – Dual control framework – Strengthening UCBs’ financial position – Supervisory system strengthening – Implementation status & regulatory improvements – Recent developments |
| Financial Stability | – Global economic crisis implications – Risks & early warning signals – Liquidity management in banks – Basel norms (II & III) implementation progress – RBI’s Basel III perspective – Effect of liberalization & globalization – Consultative & transparent approaches – Linkage with international financial stability – Role of supervisor under Basel II & III |
CAIIB Elective Paper 5 Central Banking Syllabus – Banking Financial Companies (NBFCs) and Primary Dealers (PDs)
The detailed syllabus for Module F is as follows:
| Topic | Details |
| NBFCs: Development, Regulation & Supervision | – Registration conditions – NBFCs under RBI & other regulators – Classification categories – Growth & prudence in NBFC sector – RBI’s role in development & regulation – Scale-based regulatory framework – Special Liquidity Scheme (SLS) – Alignment of HFCs with NBFCs – SARFAESI Act: Secured debt limit – Dividend declaration – Supervisory policies – Auditor appointment – PCA framework for NBFCs – Pandemic impact |
| Primary Dealers (PDs) | – Evolution of PDs – Eligibility conditions – Roles & responsibilities – Liquidity support from RBI – Operations & performance – Financial performance of SPDs – Operational, regulatory & supervisory provisions – Investment guidelines – Capital adequacy & risk management |
CAIIB Elective Paper 5 Central Banking Syllabus – Appendix
The detailed syllabus for Module appendix is as follows:
| Topic | Details |
| Important References | – Important Committees set up by RBI – Major international financial institutions: genesis, objectives & functions – A note on cryptocurrencies & CBDC – RBI discussion paper/report on sustainable finance – Glossary of central banking terms |
FAQs
Banking professionals seeking in-depth knowledge of central banking and monetary policies should take it.
Yes, both theoretical and practical aspects of monetary and credit policies are included.
Yes, it includes legal framework, risk management, investment patterns, and adequacy of reserves.
Yes, the syllabus details LAF, open market operations, and RBI strategies during crises like COVID-19.
Yes, the syllabus explains transparency, credibility, and communication strategies of RBI.
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