▫️The RBI has a government- constituted Monetary Policy Committee (MPC) which is tasked with framing monetary policy using tools like the Repo Rate, Reverse Repo Rate, Bank Rate, Cash Reserve Ratio.
▫️The MPC is entrusted with the responsibility of deciding the different policy rates including, Marginal Standing Facility, Repo Rate, Reverse Repo Rate, and Liquidity Adjustment Facility.
▪️Composition of MPC
▫️The committee will have six members. Of the six members, the government will nominate three. No government official will be nominated to the MPC.
▫️The other three members would be from the RBI with the governor being the ex-officio chairperson. Deputy governor of RBI in charge of the monetary policy will be a member, as also an executive director of the central bank.
▪️Selection of members
▫️The government nominees to the MPC will be selected by a Search-cum-Selection Committee under Cabinet Secretary with RBI Governor and Economic Affairs Secretary and three experts in the field of economics or banking or finance or monetary policy as its members.
▪️Term of Members
▫️Members of the MPC will be appointed for a period of four years and shall not be eligible for reappointment.
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