Economics · Monetary Policy Framework
Consider the following statements regarding the Monetary Policy Framework and Money Supply in India: Statement I: The Monetary Policy Committee (MPC) consists of six members (three from RBI and three appointed by the Central Government), and the RBI Governor has a casting vote in case of a tie. Statement II: The Cash Reserve Ratio (CRR) is an indirect instrument of monetary policy because it affects market interest rates through credit demand. Statement III: The Statutory Liquidity Ratio (SLR) requires banks to maintain a specified percentage of Net Demand and Time Liabilities (NDTL) in liquid assets such as gold, cash, or unencumbered government securities. Statement IV: An increase in the Repo Rate is a contractionary monetary policy signal as it increases borrowing costs for commercial banks. Statement V: Under the flexible inflation targeting framework, if average inflation remains outside the 2% to 6% target band for three consecutive quarters, the RBI is deemed to have failed its mandate. Which of the statements are correct?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1All I, II, III, IV and V
- 2Only I, III, IV and V✓
- 3Only II, III and V
- 4Only I, III and IV
Correct answer
Only I, III, IV and V
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