Skip to content

CSEET · Economic and Business Environment · Key Government Institutions

Under the current monetary policy framework in India, the Monetary Policy Committee (MPC) is constituted to do which of the following?

The Monetary Policy Committee determines the policy interest rate required to achieve the inflation target under India's flexible inflation targeting framework. It does not supervise banks daily, issue one rupee notes, which the Government issues, or regulate securities markets, which is SEBI's job.

  1. ADetermine the policy interest rate required to achieve the inflation targetCorrect
  2. BSupervise and inspect all commercial banks on a day-to-day basis
  3. CIssue currency notes of all denominations including one rupee notes
  4. DRegulate the securities market and stock exchanges

Explanation

The MPC, set up under the RBI Act through the 2016 amendment, fixes the policy rate needed to meet the flexible inflation target set by the Government in consultation with the RBI. Supervision of banks is handled by the RBI's supervisory departments, and securities market regulation belongs to SEBI. One rupee notes are issued by the Government, not the RBI.

Did you get it right without looking?

One question tells you little. A timed set on Key Government Institutions shows your real accuracy, how long you take and where you lose marks.

Practise Key Government InstitutionsFree diagnostic mock

More Key Government Institutions questions