Consider the following statements The Monetary Policy Committee MPC has been established as per the ...........

Indian Economic System(RAS) Money and banking

Consider the following statements

The Monetary Policy Committee (MPC) has been established as per the provision of the Banking Regulation Act, 1949.
MPC aims at setting the policy (repo) rate to control inflation and realize the objective of growth.

Select the correct statement.

1 only

2 only

Both

None

Monetary Policy Committee (MPC)

Under Section 45ZB of the amended (in 2016) RBI Act, 1934 ( Not banking regulation act) , the central government is empowered to constitute a six-member Monetary Policy Committee (MPC). Under the Reserve Bank of India, Act,1934 RBI is entrusted with the responsibility of conducting monetary policy in India with the primary objective of maintaining price stability while keeping in mind the objective of growth. Further, Section 45ZB lays down that “the Monetary Policy Committee shall determine the Policy Rate required to achieve the inflation target”. The decision of the Monetary Policy Committee shall be binding on the Bank.

Section 45ZB says the MPC shall consist of 6 members

RBI Governor as its ex officio chairperson, Deputy Governor in charge of monetary policy, An officer of the Bank to be nominated by the Central Board, Three persons to be appointed by the central government. This category of appointments must be from “persons of ability, integrity and standing, having knowledge and experience in the field of economics or banking or finance or monetary policy”.

Hence only statement 2nd is correct.