The government will amend the RBI Act for setting up the Monetary Policy Committee, finance minister Arun Jaitley told the Parliament while presenting the union budget. The committee will have six members and will be headed by the RBI governor. It will have the mandate to fix the benchmark interest rates and inflation targets. Of the six members, three will be nominated by the government while three others will be from the Reserve Bank, including the governor. The committee is expected to take decisions based on the majority vote. Each member will have one vote but the governor will have a casting vote in case of equality of votes. The members representing the RBI will be the governor, deputy governor in charge of monetary policy and an officer of the RBI Bank to be nominated by the Central Board. The government-nominated members would be appointed on the recommendations made by a search-cum-selection committee, which would comprise the cabinet secretary, RBI governor, economic affairs secretary and three experts. The decision of the monetary policy committee would be binding on the RBI.
