Government decides to
bring the provisions of amended RBI Act regarding constitution of MPC into
force on 27th June, 2016 so that statutory basis of MPC is made
effective; Rules governing the procedure for Selection of Members of Monetary
Policy Committeeand Terms and Conditions of their Appointment and factors
constituting failure to meet inflation target under the MPC Framework
notified on 27th June, 2016.
With
a view to maintain price stability, while keeping in mind the objective of
growth, the Reserve Bank of India Act, 1934 (RBI Act) has been amended by the
Finance Act, 2016 to provide for a statutory and institutionalised framework
for a Monetary Policy Committee (MPC). A Committee-based approach will add lot
of value and transparency to monetary policy decisions. Out of the six Members
of MPC, three Members will be from the Reserve Bank of India (RBI), including
the Governor, who will be the ex-officio Chairperson, the Deputy Governor, RBI
and one officer of RBI. The other three Members of MPC will be appointed by the
Central Government, on the recommendations of a Search-cum-Selection Committee,
which will be headed by the Cabinet Secretary. These three Members of MPC will
be experts in the field of economics or banking or finance or Monetary policy
and will be appointed for a period of 4 years and shall not be eligible for
re-appointment. The meetings of the MPC shall be held at least 4 times a year
and it shall publicise its decisions after each such meeting.
The Government has
decided to bring the provisions of amended RBI Act regarding constitution of
MPC into force on 27th June, 2016 so that statutory basis of MPC is
made effective. The Rules governing the Procedure for Selection of Members of
Monetary Policy Committee and Terms and Conditions of their Appointment and
factors constituting failure to meet inflation target under the MPC Framework
have also been notified on 27th June, 2016.
*****
DSM/KA