Q86.
Which of the following statements is/are correct regarding the 'Monetary Policy Committee (MPC)'? 1. It decides the RBI's benchmark interest rates. 2. It is a 12-member body including the Governor of RBI and is reconstituted every year. 3. It functions under the chairmanship of the Union Finance Minister. Select the correct answer using the code given below:
Answer
A
Explanation
The RBI Act has been amended by the Finance Act, 2016, to provide for a statutory Monetary Policy Committee (MPC), entrusted with the task of fixing the benchmark policy rate (repo rate) required to contain inflation. Hence Statement 1 is correct. As per the provisions of the RBI Act, MPC has six Members — three from the RBI and three appointed by the Central Government. Hence statement 2 is not correct (it is not a 12-member body). The Governor of the Bank is the ex-officio Chairperson of MPC — not the Finance Minister. Hence statement 3 is not correct.