RBI’s Monetary Policy Committee (MPC) 52nd Meeting + SSC_CGL?.ToString()?? SSC_CGL?.ToString()+" Current Affairs";

Why in the news?
The Monetary Policy Committee, headed by RBI Governor Shaktikanta Das, announced the bi-monthly monetary policy for FY25. The RBI has kept the repo rate unchanged at 6.5 percent amid high inflation and a slump in GDP. Das said the rate has been kept unchanged to continue with the policy’s neutral stance and monitor the outlook on inflation and growth.
Key Takeaways:
1. Under Section 45ZB of the amended RBI Act, 1934, the central government is empowered to constitute a six-member Monetary Policy Committee (MPC) to determine the policy interest rate required to achieve the inflation target. The first such MPC was constituted on September 29, 2016.
2. Section 45ZB lays down that “the Monetary Policy Committee shall determine the Policy Rate required to achieve the inflation target”, and that “the decision of the Monetary Policy Committee shall be binding on the Bank”.
3. Section 45ZB says the MPC shall consist of the RBI Governor as its ex officio chairperson, the Deputy Governor in charge of monetary policy, an officer of the Bank to be nominated by the Central Board and three persons to be appointed by the central government. The last category of appointments must be from “persons of ability, integrity, and standing, having knowledge and experience in the field of economics or banking or finance or monetary policy”. (Section 45ZC)
4. In May 2016, the RBI Act was amended to provide a legislative mandate to the central bank to operate the country’s monetary policy framework. The framework, according to the Reserve Bank of India website, “aims at setting the policy (repo) rate based on an assessment of the current and evolving macroeconomic situation; and modulation of liquidity conditions to anchor money market rates at or around the repo rate.”
5. The MPC fixes the benchmark interest rate — or the base or reference rate that is used to set other interest rates — in India. The primary objective of the RBI’s monetary policy is to maintain price stability while keeping in mind the objective of growth. Price stability is a necessary precondition to sustainable growth.
Instruments of Monetary Policy:
The RBI uses several direct and indirect instruments to maintain price stability while keeping the objective of growth. The instruments are Cash Reserve ratio (CRR), Repo rate, reverse repo rate, Statutory Liquidity Ratio (SLR), Standing Deposit Facility (SDF) Rate, Bank rate, and Liquidity Adjustment Facility (LAF).
📍The CRR is the percentage of a bank’s total deposits that is required to maintain in liquid cash with the RBI as a reserve. The CRR percentage is determined by the RBI from time to time. Today (6th December) RBI slashed the cash reserve ratio (CRR) by 50 basis points (bps) to 4 per cent from 4.5 per cent in a bid to boost liquidity in the financial system. The decision to cut CRR by 50 bps will free up Rs 1.16 lakh crore to the banking system, augmenting the lendable resources of banks.
📍The interest rate that the RBI charges when commercial banks borrow money from it is called the repo rate. It is used by the banks to meet their short-term funding needs. RBI has kept the Repo rate unchanged at 6.5% in a majority 4-2 decision. With the RBI leaving the Repo rate steady at 6.5%, all external benchmark lending rates (EBLR) linked to the Repo rate will not increase, giving relief to borrowers as their equated monthly instalments (EMIs) will not increase.
📍 The interest rate that the RBI pays commercial banks when they park their excess cash with the central bank is called the reverse repo rate. Since RBI is also a bank and has to earn more than it pays, the repo rate is higher than the reverse repo rate. The current Reverse Repo Rate as per the RBI is 3.35%.
📍Statutory Liquidity Ratio (SLR) is the minimum percentage of deposits that commercial banks have to mandatorily maintain in the form of liquid cash government and state government securities. The current SLR in India is 18%.
About is Monetary Policy Committee (MPC):
The MPC was setup after a Memorandum of Understanding between the government and the RBI about the conduct of the new inflation-targeting monetary policy framework.
The Reserve Bank of India Act, 1934 (RBI Act) has been amended by the Finance Act, 2016 to provide for a statutory and institutionalized framework for an MPC.
Under Section 45ZB of the amended RBI Act, 1934, the central government is empowered to constitute a six-member MPC.
Function: The MPC is entrusted with the task of fixing the benchmark policy rate (repo rate) required to contain inflation within the specified target level. 
The MPC replaced the previous arrangement of Technical Advisory Committee.
Composition:
MPC will have six members: the RBI Governor (Chairperson), the RBI Deputy Governor in charge of monetary policy, one official nominated by the RBI Board, and the remaining three members would represent the Government of India.
The external members hold office for a period of four years.
The quorum for a meeting shall be four Members, at least one of whom shall be the Governor and, in his absence, the Deputy Governor, who is the Member of the MPC.
The MPC takes decisions based on a majority vote. In case of a tie, the RBI governor will have the second or casting vote.
The decision of the MPC would be binding on the RBI.
RBI’s Monetary Policy Department (MPD) assists the MPC in formulating the monetary policy.

Useful information for all competitive exams:
Reserve Bank of India:
Headquarters: Mumbai, Maharashtra
Established: 1 April 1935
Governor (25th): Shaktikanta Das, IAS (retd.)
Deputy Governors: M. Rajeshwar Rao, Swaminathan J, T. Rabi Sankar, Dr. M.D. Patra

In Short:
The Monetary Policy Committee, headed by RBI Governor Shaktikanta Das, announced the bi-monthly monetary policy for FY25.
The RBI has kept the repo rate unchanged at 6.5 percent amid high inflation and a slump in GDP.
Today (6th December) RBI slashed the cash reserve ratio (CRR) by 50 basis points (bps) to 4 per cent from 4.5 per cent in a bid to boost liquidity in the financial system.