Monetary Policy Committee ( MPC)

1) Who of the following will be the Chairperson of the proposed Monetary Policy Committee ?

a) Governor of RBI
b) Finance Minister
c) Deputy Governor of RBI
d) Prime Minister

2) Which of the following statements is incorrect in context of Monetary Policy Committee (MPC) to be constituted by the government of India?

a) It will be tasked with setting interest rates in the economy.
b) Members will be appointed by RBI and by external selection committee.
c) Each member will have a vote including RBI governor.
d) The three central government nominees will hold office for a period of four years

3) Which of the following members will be appointed from RBI?

a) Governor
b) Deputy Governor
c) Executive Director
d) All of the above

4) Which of the following will be the primary function of the proposed MPC?

a) Setting interest rates.
b) Setting inflation targets.
c) Regulating scheduled commercial banks
d) Both a and b

5) The search panel for government appointees will not comprise which of the following functionaries?

a) Finance minister
b) Cabinet secretary
c) Economic affairs secretary
d) RBI governor

6) Which of the following statements regarding MPC is incorrect?

a) Its decisions would be binding on RBI.
b) Its decisions would be based on majority vote.
c) The quorum for a meeting shall be three Members.
d) RBI governor will have the second or casting vote.

Answers:

1) a
2) c
3) d
4) d
5) a, It will also comprise three experts in economics or banking nominated by the government
6) c , The quorum for a meeting shall be four Members, at least one of whom shall be the Governor and in his absence, the Deputy Governor
---------------------------------------------------

 Note : Out of 6 members 3 members will be appointed by RBI and other by external selection committee. RBI governor will have a casting vote in the event of a tie. The three central government nominees of the MPC will hold office for a period of four years and will not be eligible for re-appointment.

The panel will meet at least four times a year and the government may convey its views in writing. The RBI will publish a monetary policy report every six months, with forecasts of inflation for between six and 18 months. If the RBI fails to meet the inflation target, it will provide reasons for failure, remedial actions as well as the estimated time within which the target will be achieved.