Economics • Banking & FinanceHard
How does the 'Monetary Policy Committee' established under the Reserve Bank of India Act, 1934 make its policy decisions?
A. By executive directive issued exclusively by the Governor of the Reserve Bank
B. By majority vote, with each member holding one vote and the Governor holding a casting vote in case of a tie✓ Correct Answer
C. By unanimous consensus among all six appointed members without voting mechanisms
D. By parliamentary ratification following recommendations submitted by the Union Finance Ministry
💡 Solution & Explanation
The Monetary Policy Committee determines the benchmark policy rate through a majority vote where each member has one vote, and the RBI Governor exercises a casting vote in the event of a tie. Unanimity is not legally required for policy determinations. Executive directives without committee deliberation were replaced by the statutory six-member framework enacted via 2016 amendments. Parliamentary ratification is not mandated for routine repo rate adjustments.
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