RBI nominates Dr Michael Patra as third member of MPC

The Reserve Bank of India today announced it was appointing Dr Michael Patra as one of the nominees in the upcoming monetary policy committee (MPC).The formation of the MPC, a brainchild of outgoing Reserve Bank Governor Raghuram Rajan, was announced by Finance Minister Arun Jaitley in the Budget this year.After it comes into effect, the committee will take over the role of taking interest rate decisions from the RBI governor. The aim of the committee is to bring value and transparency to monetary policy decisions.The committee would comprise of six members - three from the Reserve Bank of India and three by the government. The government representatives will nominated by a search committee headed by the Cabinet Secretary. From the RBI side, the members would be the Governor, deputy Governor and executive director.From RBI's side, the nominees will the governor, deputy governor in charge of monetary policy (currently Urjit Patel) and a third member, today appointed. The governor will have a casting vote in case of a tie. (Under the current system, the central bank governor has overriding powers to accept or reject the recommendation of the RBI panel on monetary policy.)On June 27, 2016, the Government of India amended the RBI Act to hand over the job of monetary policy-making in India to a newly-constituted Monetary Policy Committee (MPC).Rajan today further said he hoped that the next monetary policy decision, the first under the new RBI Governor, will be taken by the MPC. "Almost all the work is done. Only the government nominees are to be announced, which is also under process."“With the formation of the MPC, the Government and the RBI will have completed a fundamental institutional reform, which modernizes India’s monetary policy framework and builds a platform for strong and sustainable growth,” Rajan said.