RBI forms Monetary Policy Committee for Finance Act 2016!
Q. RBI has been amended by which act to provide for a Monetary Policy Committee for the maintenance of price stability?- Published on 03 Oct 16
a. Finance Act 2016
b. Treasuries Act 2016
c. Financial Policy Act 2016
d. None of the above
ANSWER: Finance Act 2016
The Reserve Bank of India Act 1934 has been amended by the Finance Act 2016 to provide for an institutionalised and statutory framework for price stability through the Monetary Policy Committee
- As per the provisions of the RBI Act, of the six members of the Monetary Policy Committee, three are from the RBI
- Other three members of the MPC will be appointed by the Central Government
- In exercise of the powers given by section 45ZB of the Reserve Bank of India Act 1934, the Union Government has constituted the Monetary Policy Committee of the RBI with the composition:
- The Governor of the Bank: Ex Officio Chairperson
- Deputy Governor of the Bank, in charge of Monetary Policy: Member,ex officio
- One officer of the Bank to be nominated from the Central Board: Member, ex officio
- Chetan Ghate, Professor ISI: Member
- Pami Dua, Director, DSE: Member
- Ravindra Dholakia, Professor, IIM-A: Member
- Members of the Monetary Policy Committee will hold office for 4 years
- Monetary Policy Committee has been appointed with the aim of fixing the benchmark policy rate or repo rate required to combat inflation within a specified target level.
- Committee based approach for determining Monetary Policy adds value and transparency to the monetary policy decisions.
- Meetings of the Committee will be held 4 times in a year and decisions will be published after each such meeting