Economics • Banking & FinanceMedium
What is the statutory objective of establishing the Monetary Policy Committee in India under the Reserve Bank of India Act of nineteen thirty-four?
A. To determine the benchmark policy interest rate required to achieve the inflation target mandated by the central government✓ Correct Answer
B. To audit the annual financial accounts and balance sheets of all scheduled commercial banks
C. To supervise foreign exchange transactions and fix daily currency exchange parities
D. To manage the public debt issuance program of the central and state governments directly
💡 Solution & Explanation
The Monetary Policy Committee was constituted under Section forty-five ZB of the Reserve Bank of India Act to determine the policy interest rate required to maintain price stability while keeping growth objectives in mind, operating under a flexible inflation-targeting framework. Bank auditing is conducted by statutory auditors appointed under banking regulations. Foreign exchange management is handled through operational guidelines aligned with market dynamics. Public debt management has transitioned largely toward specialized units.
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