11) Which of the following statements is/are correct regarding the Monetary Policy Committee (MPC)?
- It decides the RBI’s benchmark interest rates.
- It is a 12-member body including the Governor of RBI and is reconstituted every year.
- It functions under the chairmanship of the Union Finance Minister.
Select the correct answer using the code given below :
(a) 1 only
(b) 1 and 2 only
(c) 3 only
(d) 2 and 3 only
Solution: A
It was one of the most significant reform in India’s monetary policy framework post independence.
Explanation :
Statement 1: Monetary Policy Committee (MPC) decides the repo rates, CRR, SLR etc. It replaced the earlier system where the RBI governor made the decision.
Statement 1: Monetary Policy Committee (MPC) decides the repo rates, CRR, SLR etc. It replaced the earlier system where the RBI governor made the decision.
Statement 2: It consists of six members (RBI Governor, Deputy Governor RBI, One RBI officer and three members nominated by the government), and they hold office for a period of four years.
Statement 3: The Governor of the RBI is the ex-officio Chairperson of Monetary Policy Committee (MPC).
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