Which of the following statements is/are correct regarding the Monetary Policy Committee (MPC) ?
- 1.It decides the RBI’s benchmark interest rates.
- 2.It is a 12-member body including the Governor of RBI and is reconstituted every year.
- 3.It functions under the chairmanship of the Union Finance Minister.
Select the correct answer using the code given below :
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Answer: A. Statement 1 is correct: the MPC fixes the policy repo rate. Statement 2 is wrong: it has six members (three from RBI including the Governor, three appointed by the Centre for four years), not twelve, and is not reconstituted yearly. Statement 3 is wrong: the RBI Governor chairs it, not the Finance Minister. So 1 only.
Watch for: Watch for the chair; the government nominates members but the Finance Minister has no seat.
Why the other options are wrong
- B. Wrong because the MPC has six members, not twelve.
- C. Wrong because the Governor, not the Finance Minister, chairs it.
- D. Wrong because both statements 2 and 3 are false.
Source to check: Reserve Bank of India Act, 1934, Sections 45ZB and 45ZI (as amended by Finance Act, 2016); RBI site, 'Monetary Policy Committee' (rbi.org.in)
Answer from the official UPSC key. Written and fact-checked by AI against the official key. Spotted a mistake? Report it.