Question

Under the Reserve Bank of India Act, 1934, as amended in 2016, the Monetary Policy Committee (MP

Q: Answer-Under the Reserve Bank of India Act, 1934, as amended in 2016, the Monetary Policy Committee (MPC) c...

Under Sections 45ZB and 45ZA of the Reserve Bank of India Act, 1934, inserted by the Finance Act, 2016, the Monetary Policy Committee has six members the Governor as its ex officio chairperson, a Deputy Governor in charge of monetary policy, one officer of the RBI nominated by its Central Board, and three persons appointed by the Central Government. The MPC determines the policy rate required to achieve the inflation target fixed by the Government, which is 4 per cent with a tolerance band of plus or minus 2 per cent. Decisions are taken by majority vote with the Governor having a casting vote in case of a tie. The composition and the inflation target together identify the correct option.

C consists of:

A Seven members including the Finance Secretary, who serves as an ex officio member.

B The Governor, three Deputy Governors and two Finance Ministry officials, making six members.

C Six members, namely the Governor, a Deputy Governor, one RBI officer nominated by the Central Board and three members appointed by the Central Government, with an inflation target of 4 per cent within a tolerance band of plus or minus 2 per cent.

D Five members, all appointed by the Central Government, with the Governor having a casting vote.

E The Governor and four Deputy Governors only, making five members in total.

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