Monetary Policy Committee
Q. Which of the following is/are true regarding proposed Monetary Policy Committee?
1) It consists of 6 members, with three from the RBI and does not include the RBI deputy governor.
2) Three members will be appointed by the Central Government for a period of 4 years.- Published on 28 Jun 16a. Only 1
b. Only 2
c. Both 1 and 2
d. Neither 1 nor 2
ANSWER: Only 2
- With a view to maintain price stability, while keeping in mind the objective of growth, the Reserve Bank of India Act, 1934 (RBI Act) has been amended by the Finance Act, 2016 to provide for a statutory and institutionalised framework for a Monetary Policy Committee (MPC). A Committee-based approach will add lot of value and transparency to monetary policy decisions.
- Out of the six Members of MPC, three Members will be from the Reserve Bank of India (RBI), including the Governor, who will be the ex-officio Chairperson, the Deputy Governor, RBI and one officer of RBI.
- The other three Members of MPC will be appointed by the Central Government, on the recommendations of a Search-cum-Selection Committee, which will be headed by the Cabinet Secretary. These three Members of MPC will be experts in the field of economics or banking or finance or Monetary policy and will be appointed for a period of 4 years and shall not be eligible for re-appointment.
- The meetings of the MPC shall be held at least 4 times a year and it shall publicise its decisions after each such meeting.
