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.