Economics • Banking & FinanceEasy
What is the primary purpose of the 'Monetary Policy Committee (MPC)' established under the Reserve Bank of India Act, 1934?
A. To fix the benchmark policy interest rate (Repo rate) required to contain inflation within targeted limits✓ Correct Answer
B. To allocate credit quotas to different industrial sectors of the economy
C. To audit the financial statements of public sector commercial banks annually
D. To manage foreign direct investment inflows and approvals
💡 Solution & Explanation
The Monetary Policy Committee established under the Reserve Bank of India Act is statutorily mandated to fix the benchmark policy repo rate required to contain inflation within targeted limits. It does not allocate credit quotas to industries or audit commercial bank statements directly. Central banking mechanisms are regularly featured in Indian economy papers.
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