The Central Board of the Reserve Bank of India on Thursday discussed the constitution of Monetary Policy Committee (MPC), the central bank’s budget and macroeconomic developments, among other issues during the meeting held in the country’s IT capital Bengaluru .
The MPC is a six-member panel, headed by the RBI governor along with two other members -- deputy governor and an executive director -- that will decide key policy rates. The other three members will be nominated by the government after recommendations of a search-cum-selection committee, headed by the cabinet secretary. The search-cum-selection committee will also include the economic affairs secretary and the RBI governor.
The MPC will meet four times a year to decide on the monetary policy by a majority vote. Each MPC member will have one vote, with the governor having an additional vote in case of a tie. The committee has been constituted to have the government’s equal say while deciding on key interest rates during a monetary policy review. Presently, the RBI governor enjoys overriding powers having a final say on monetary policy decisions.
The Central Board, which met in Bengaluru after a span of seven years discussed “among other issues, macroeconomic developments and two other specific areas of operations of the RBI -- the RBI’s budget and constitution of Monetary Policy Committee”, RBI said.
The Board also reviewed the activities for Payment and Settlement System for the year ended March 2016, and discussed the draft Annual Report for 2015-16.
The meeting was chaired by RBI governor Raghuram Rajan and was attended by deputy governors Urjit Patel, R Gandhi, SS Mundra and the newly-appointed NSVishwanathan. The government nominee director on the Board -- Department of Economic Affairs secretary Shaktikanta Das also attended the meeting.