The Monetary Policy Committee (MPC) is a statutory body constituted under Section 45ZB of the Reserve Bank of India Act, 1934, inserted via the Finance Act, 2016. The institution formalized the recommendations of the 2014 Urjit Patel Committee to replace gubernatorial discretion with a collegiate monetary framework. The primary legislative objective mandates anchoring the flexible inflation targeting framework, set under Section 45ZA at 4.0 percent headline Consumer Price Index (CPI) inflation, with an operational tolerance band of plus or minus 2 percentage points (2.0 to 6.0 percent). The Committee comprises six members: the RBI Governor as ex-officio Chairperson, the Deputy Governor in charge of monetary policy, one officer nominated by the RBI Central Board, and three external experts appointed by the Central Government for four-year non-renewable terms. The MPC meets at least four times annually, with each member exercising one vote and the Governor holding a casting vote. Under Section 45ZN, failure to maintain the target occurs when average inflation remains outside the tolerance band for three consecutive quarters, obligating the RBI to submit a formal explanatory report to Parliament detailing economic drivers, remedial interventions, and a projected stabilization timeframe.
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The Monetary Policy Committee (MPC) was instituted under Section 45ZB of the Reserve Bank of India Act, 1934, enacted through amendments in the Finance Act, 2016.
The statutory framework materialized the recommendations of the Urjit Patel Committee Report of January 2014 on revising monetary policy mechanisms.
Section 45ZA mandates the Central Government, in consultation with the RBI, to determine the inflation target in terms of the Consumer Price Index (CPI) once every five years.
The statutory inflation target is fixed at 4.0 percent headline CPI with an allowable tolerance band of plus or minus 2 percentage points (2 percent minimum to 6 percent maximum).
The MPC comprises six members: three internal officials from the RBI and three external experts appointed by the Central Government for a non-renewable four-year tenure.
The Governor of the Reserve Bank of India serves as the ex-officio Chairperson of the MPC and exercises a casting vote in the event of an equality of votes.
The statutory quorum for an MPC meeting requires at least four members, with mandatory attendance by either the Governor or the Deputy Governor in charge of monetary policy.
Each member of the MPC possesses one vote, and decisions regarding the benchmark policy repo rate are adopted through majority consensus.
Under Section 45ZL, the RBI must publish the resolution adopted by the MPC on the conclusion of every meeting, detailing the policy stance and decision.
Section 45ZM mandates the publication of detailed meeting minutes on the 14th day following each MPC conclave, including individual voting rationales of each member.
Failure to achieve the inflation target occurs under Regulation 7 when average headline CPI inflation breaches the 2 to 6 percent band for three consecutive quarters.
Upon statutory failure under Section 45ZN, the RBI must submit a confidential report to the Central Government outlining causes, proposed remedies, and a return timeline.
The MPC is legally required to assemble at least four times during each financial year, typically convening bi-monthly for scheduled policy deliberations.
The Monetary Policy Report is published bi-annually by the RBI under Section 45ZM, evaluating inflation forecasts, macroeconomic projections, and output gaps.
The policy corridor consists of the standing Standing Deposit Facility (SDF) rate at the lower bound and the Marginal Standing Facility (MSF) rate at the upper bound.
How many total members constitute India's Monetary Policy Committee (MPC) responsible for setting the benchmark policy interest rate?
Verified Explanation
The Monetary Policy Committee (MPC) consists of 6 members: 3 from the Reserve Bank of India (including the Governor as Chairperson) and 3 external members appointed by the Central Government.
2ID: GK-BANK-00364
easyRBI Functions, Repo Rates & Monetary Policy
How many total members constitute the Monetary Policy Committee (MPC) established under Section 45ZB of the Reserve Bank of India Act, 1934?
Verified Explanation
Under Section 45ZB of the RBI Act, 1934, the Monetary Policy Committee consists of 6 members: the RBI Governor (Chairperson), Deputy Governor in charge of monetary policy, one officer nominated by the Central Board of RBI, and three external persons appointed by the Central Government.
3ID: GK-BANK-00424
easyRBI Functions, Repo Rates & Monetary Policy
How many members constitute the Monetary Policy Committee (MPC) of the Reserve Bank of India?
Verified Explanation
Under Section 45ZB of the amended RBI Act 1934, the Monetary Policy Committee (MPC) consists of 6 members: 3 from the RBI (including the Governor as ex-officio Chairperson) and 3 external members appointed by the Central Government.
4ID: GK-BANK-00487
easyRBI Functions, Repo Rates & Monetary Policy
How many total members constitute the Monetary Policy Committee (MPC) of India?
Verified Explanation
Under Section 45ZB of the amended RBI Act, 1934, the Monetary Policy Committee consists of 6 members: 3 from the RBI (Governor, Deputy Governor in-charge of monetary policy, one internal officer) and 3 external members nominated by the Central Government.
5ID: GK-BANK-00488
easyRBI Functions, Repo Rates & Monetary Policy
Who acts as the ex-officio Chairperson of the Monetary Policy Committee (MPC) of the Reserve Bank of India?
Verified Explanation
Under Section 45ZB(2) of the RBI Act, the Governor of the Reserve Bank of India serves as the ex-officio Chairperson of the Monetary Policy Committee and exercises a casting vote in the event of an equality of votes.
6ID: GK-BANK-00549
easyRBI Functions, Repo Rates & Monetary Policy
Under Section 45ZB of the Reserve Bank of India Act, 1934, what is the fixed term of office for the three external members nominated to the Monetary Policy Committee (MPC) by the Central Government?
Verified Explanation
Under Section 45ZB(2) of the RBI Act, 1934, the three external members of the Monetary Policy Committee (MPC) appointed by the Central Government hold office for a period of four years and are ineligible for reappointment.
7ID: GK-BANK-00010
easyRBI Functions, Repo Rates & Monetary Policy
Who serves as the ex-officio Chairperson of the Monetary Policy Committee (MPC) in India?
Verified Explanation
The Governor of the Reserve Bank of India acts as the ex-officio Chairperson of the MPC and exercises a casting vote in the event of an equality of votes.
8ID: GK-BANK-00028
mediumRBI Functions, Repo Rates & Monetary Policy
What is the core inflation target set for the Monetary Policy Committee (MPC) under the flexible inflation targeting framework?
Verified Explanation
Under Section 45ZA of the RBI Act, the Central Government in consultation with the RBI has fixed the Consumer Price Index (CPI) inflation target at 4% with upper tolerance of 6% and lower tolerance of 2%.
9ID: GK-BANK-00174
hardRBI Functions, Repo Rates & Monetary Policy
Under Section 45ZB of the Reserve Bank of India Act, 1934, what is the statutory quorum required for holding a meeting of the Monetary Policy Committee (MPC)?
Verified Explanation
Under Section 45ZI(1) of the RBI Act, the quorum for a meeting of the MPC shall be four members, at least one of whom shall be the Governor and in his absence, the Deputy Governor who is a member of the MPC.
10ID: GK-BANK-00264
mediumRBI Functions, Repo Rates & Monetary Policy
What is the statutory tenure of office for the three non-official external members appointed by the Central Government to India's Monetary Policy Committee (MPC)?
Verified Explanation
Under Section 45ZB(3) of the RBI Act, 1934, the external members of the MPC hold office for a fixed term of four years and are strictly not eligible for reappointment.