Economics • Banking & FinanceHard
Examine the composition and mandate of the Monetary Policy Committee (MPC) established under the Reserve Bank of India Act, 1934. How many total members constitute this apex rate-setting body?
A. Four members, all appointed directly by the Ministry of Finance
B. Six members, comprising three officials from the central bank and three external members appointed by the government✓ Correct Answer
C. Eight members, including representatives from all scheduled commercial banks
D. Five members headed exclusively by the Prime Minister of India
💡 Solution & Explanation
The Monetary Policy Committee consists of six members: the Governor of the Reserve Bank of India as chairperson, a Deputy Governor, one officer of the Bank, and three external members appointed by the central government based on recommendations of a search selection committee. The committee is tasked with determining the policy interest rate required to achieve the inflation target. Other options misstate both the total strength and composition of the panel. It institutionalizes collective decision-making in monetary management.
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