Economics • Banking & FinanceMedium
What is the primary role of the 'Monetary Policy Committee' constituted under the Reserve Bank of India Act, 1934?
A. To determine the benchmark policy interest rate required to achieve the inflation target set by the government✓ Correct Answer
B. To audit commercial bank balance sheets for compliance with capital adequacy norms
C. To administer deposit insurance payouts during scheduled bank liquidation proceedings
D. To fix corporate tax rates and customs duties for the union fiscal budget
💡 Solution & Explanation
The Monetary Policy Committee is statutorily mandated under Section 45ZB of the RBI Act to determine the policy repo rate required to maintain price stability while keeping growth in mind. Commercial bank audits are supervised by RBI inspection departments and statutory auditors. Deposit insurance is managed separately by DICGC. Fiscal policy decisions including tax rates remain the sole prerogative of the central government ministry of finance.
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