BANKING AFFAIRS

Detailed explanation-1: -Under the Reserve Bank of India, Act, 1934 (RBI Act, 1934) (as amended in 2016), RBI is entrusted with the responsibility of conducting monetary policy in India with the primary objective of maintaining price stability while keeping in mind the objective of growth.

Detailed explanation-2: -The Union Budget 2016-17 announced the constitution of a Monetary Policy Committee (MPC) by amending the RBI Act, 1934. The amendment to the Act was notified in the Gazette of India on May 14, 2016 and came into force on June 27, 2016. III.

Detailed explanation-3: -The Reserve Bank of India Act, 1934 (II of 1934) provides the statutory basis of the functioning of the Bank, which commenced operations on April 1, 1935.

Detailed explanation-4: -In 2015, India’s parliament amended the Reserve Bank of India (RBI) Act of 1933 to make inflation control the sole objective of monetary policy. The amendment mandated RBI to pursue an inflation target of 4%, measured in terms of the Consumer Price Index (CPI), with a tolerance band of ± 2 percentage point.

Detailed explanation-5: -This transition culminated in the inflation-targeting (IT) agreement of February 2015 and an amended RBI Act in May 2016, which gave the central bank a statutory inflation target. At this point, the RBI adopted a full IT framework, emulating international best practice.