 "Government initiates process to frame Monetary Policy Committee under RBI Act")
With an aim to curb price hike and maintaining price stability, while keeping in mind the objective of growth, the Reserve Bank of India Act, 1934, has been amended by the Finance Act, 2016.
The act aims to provide for a statutory and institutionalised framework for a Monetary Policy Committee (MPC), which will be based on the approach to add lot of value and transparency to monetary policy decisions.
Out of the six members of the MPC, three will be from the RBI, including the Governor, who will be the ex-officio chairperson, the Deputy Governor, RBI, and one officer of the apex bank.
The other three members of the 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 the MPC will be experts in the field of economics or banking or finance or monetary policy. They will be appointed for a period of four years and shall not be eligible for re-appointment.
The meetings of the MPC shall be held at least four times a year and it shall publicise its decisions after each such meeting.
The Centre has decided to bring the provisions of amended RBI Act regarding constitution of the MPC into force on June 27, 2016, so that statutory basis of the 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 Monday.
