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SubjectsEconomyIndian Economy — BasicsChapter 2 — Money & Banking2.5 Monetary Policy & the MPC

Topic 2.5 · Economy · Money & Banking

Monetary Policy & the MPC

Monetary Policy & the MPC is studied as part of "Money & Banking" (Indian Economy — Basics) in Economy. Money supply, the Reserve Bank of India and the commercial banking system form the backbone of the Indian financial sector.

In the examination context, monetary policy & the mpc carries conceptual questions that test both factual recall and analytical understanding. Revise this topic in sequence with the rest of the chapter so that chronological and thematic links are clear.

Important Facts

RBI
Sole issuer of currency — RBI Act 1934
Repo rate
Rate at which RBI lends to banks
CRR
Cash reserve ratio — kept with RBI
Monetary Policy Committee
Six members — decides policy repo rate

Key Points

  • RBI — Sole issuer of currency — RBI Act 1934
  • Repo rate — Rate at which RBI lends to banks
  • CRR — Cash reserve ratio — kept with RBI
  • Monetary Policy Committee — Six members — decides policy repo rate

Important Names

C.D. DeshmukhShaktikanta DasRaghuram Rajan

Important Dates

1935RBI established
2016MPC constituted under amended RBI Act
Exam-Oriented Notes
  • »One-rupee note is issued by the government, all other notes by RBI. CRR and repo rate are the two most-tested instruments.

Related topics

2.1 Functions of Money2.2 Money Supply Measures2.3 Reserve Bank of India — Functions2.4 Commercial Banks & NBFCs
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