MPC stands for Monetary Policy Committee of Reserve Bank of India.

How many members are there in the MPC?

MPC have six members out which three members are appointed by Government of India and Governer of RBI is chairperson of MPC.

The interest rate at which the Reserve Bank offers short-term/overnight funding to banks using government and other authorized securities as collateral.

Inflation is a rise in prices, which can be translated as the decline of purchasing power over time.

RBI Monetary Policy 2024 Highlights, Repo Rate Unchanged |

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RBI Monetary Policy 2024

During its seventh review meeting, the Reserve Bank of India decided to keep policy interest rates and its monetary stance unchanged. This decision was based on factors such as uncertainty in food prices and the flexibility provided by strong economic growth. As a result, the anticipated reduction in interest rates has been postponed, maintaining a status quo for at least 16 months. India stands out as a positive exception amidst global economic challenges, allowing the central bank to continue its efforts to combat inflation, which has been under control in recent quarters. This article presents some of the key highlights of seventh review meeting of MPC and also explains some terms related to Monetary Policy.

What is Monetary Policy?

Monetary policy pertains to the strategy adopted by the central bank concerning the utilization of monetary tools at its disposal to accomplish the objectives outlined in the legislation. The primary goal of the RBI’s monetary policy is to uphold price stability while also taking into account the aim of promoting economic growth.

Ensuring price stability is essential precondition for achieving sustainable growth.

The amended RBI Act of 1934 also includes provisions for the Government of India, in consultation with the Reserve Bank, to establish the inflation target (4% +-2%) once every five years.

Monetary Policy Committee

Under Section 45ZB of the revised RBI Act, 1934, the central government has the authority to form a six-member MPC tasked with determining the policy interest rate necessary to meet the inflation target. The first MPC was established on September 29, 2016.

The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) will meet to formulate its response to the Government of India regarding the elevated level of inflation in the nation.

Members of Monetary Policy Committee

MPC consist of six members, Governer of RBI is Chairperson of MPC, Deputy Governer of RBI is In-charge of Monetary Policy, one member is nominated by the Board of RBI, three members are appointed by Central Government.

Monetary Policy Committee (on 05 April 2024)
Chairperson (Governer of RBI)	Sri Shaktikanta Das
In-charge of Monetary Policy (Deputy Gov. of RBI)	Dr. Michael D. Patra
Member 1 (Nominated by Central Board of RBI)	Dr. Rajiv Ranjan
Member 2	Dr. Ashima Goyal
Member 3	Dr. Shashanka Bhide
Member 4	Prof. Jayanth R. Varma

RBI Monetary Policy 2024: Key Highlights

The table below presents some key highlights of the monetary policy committees review meeting held on 05 April 2024.

Key Highlights of MPC Meeting
Repo Rate	6.50%
Reverse Repo Rate	3.35%
Standing Deposit Facility (SDF)	6.25%
Marginal Standing Facility (MSF)	6.75%
Bank Rate	6.75%
Cash Reserve Ratio (CRR)	4.50%
Statutory Liquidity Ratio (SLR)	18.0%

Some Other Key Highlights of MPC Meeting

The RBI has projected India’s real GDP growth rate for FY25 at 7%.
Consumer Price Index (CPI) inflation for FY25 is estimated at 4.5%.
Headline inflation has eased to 5.1 per cent during January and February 2024.
The RBI Retail Direct Scheme was launched in November 2021. It is now proposed to launch a mobile app for accessing the Retail Direct portal.

Some Important Terms Related to Monetary Policy

Here will understand the definition of some important tools of Monetary Policy such as Repo Rate, SLR, SDF, CRR etc. The table below provides some basic definition of terms related to RBI Monetary Policy.

Definitions of Terms Related to Monetary Policy
Repo Rate	The interest rate at which the Reserve Bank offers short-term/overnight funding to banks using government and other authorized securities as collateral through the liquidity adjustment facility (LAF).
Reverse Repo Rate	The interest rate at which the Reserve Bank withdraws excess liquidity from banks overnight, using eligible government securities as collateral through the liquidity adjustment facility (LAF).
Marginal Standing Facility (MSF)	It is a rate at which banks can borrow overnight funds from RBI by furnishing authorized Govt. Securities. Minimum Loan = 1 Crore Maximum Loan = 2% of NDTL
Statutory Liquidity Ratio (SLR)	The proportion of Net Demand and Time Liabilities (NDTL) that a bank must hold in secure and readily convertible assets, including unencumbered government securities, cash, and gold. Alterations in SLR frequently impact the amount of funds available within the banking system for lending to private enterprises.
Bank Rate	The Bank Rate signifies the rate at which the RBI is prepared to purchase or rediscount bills of exchange or other commercial papers. It is disclosed in accordance with Section 49 of the RBI Act, 1934.
Cash Reserve Ratio (CRR)	The average daily balance that a bank must uphold with the Reserve Bank, expressed as a percentage of its Net Demand and Time Liabilities (NDTL), as stipulated by notifications published in the Gazette of India.