NEW DELHI : New RBI governor Urjit Patel has been given a September 15 deadline to put in place the monetary policy committee (MPC), top sources in the government told HT.
“Urjit Patel will have to hit the ground running. He has to ensure that the committee is in place within one month of taking over as the RBI governor,” said a government official, who did not wish to be named.
The policy announcement scheduled for October 4 would be the first by the MPC.
As deputy governor, Patel had chaired a committee, which mooted the idea of setting up the MPC in February 2014. It was finally set up by amending the Reserve Bank of India Act, 1934, through the Finance Bill 2016. The MPC will have three government nominees along with the RBI deputy governor in charge of monetary policy, and an office member of the central bank.
The RBI governor will be the chairman of the committee. He will have a casting vote in case of a tie. The members will be appointed for period of four years and cannot be re-appointed.
The government nominees on the MPC have been shortlisted by a search-cum-selection committee headed by the cabinet secretary with the RBI governor (at the time, Raghuram Rajan), the economic affairs secretary and three experts in the field of economics or banking as members.
{{/usCountry}}The government nominees on the MPC have been shortlisted by a search-cum-selection committee headed by the cabinet secretary with the RBI governor (at the time, Raghuram Rajan), the economic affairs secretary and three experts in the field of economics or banking as members.
{{/usCountry}}The government is expected to finalise its member within the next few days, said the source .
After taking over on September 6, Patel, who was the deputy governor in charge of monetary policy, will have to appoint his replacement to succeed him on the panel.
The government will also have to finish the work of nominating its members by September 15. The RBI has already nominated executive director Michael Patra on the MPC.
The work of the MPC is to decide the interest rate that banks can charge keeping in mind the inflation target fixed by the government. Under the agreement with the government, the RBI is committed to anchoring retail inflation at 4% (plus/minus 2%) and has set itself a target of 5% to be achieved by next March.
Rajan, in his last bi-monthly monetary policy announcement, had said that he hoped the MPC would take charge of the next policy in October.