Daily Static Quiz Prelims Practice 2027
- It has six members, of whom three are from the RBI and three are appointed by the Central Government.
- The external members are appointed by the Governor of the RBI.
- In the case of a tie, the Governor has a casting vote.
- The quorum for a meeting is four members.
Statement 1 is correct — the RBI Governor (Chairperson), a Deputy Governor and one RBI officer are the three RBI members, and the Central Government appoints three external members. Statement 2 is incorrect — the external members are appointed by the Central Government on the recommendation of a search-cum-selection committee headed by the Cabinet Secretary, and serve four years without reappointment. Statement 3 is correct — each member has one vote, and the Governor has a second, casting vote in a tie. Statement 4 is correct — the quorum is four members, including the Governor or, in his absence, the Deputy Governor.
CPI (Combined), covering rural and urban areas, is released by the NSO under MoSPI. The Labour Bureau compiles CPI-IW (Industrial Workers) and CPI-AL/RL (Agricultural and Rural Labourers), and the Office of the Economic Adviser, DPIIT publishes the Wholesale Price Index, which covers goods and not services. The RBI uses the index but does not compile it.
- Assertion (A): The Marginal Standing Facility (MSF) rate is set higher than the repo rate.
- Reason (R): Under the MSF, scheduled commercial banks can borrow overnight from the RBI against government securities.
A is correct — the MSF rate is 25 basis points above the repo rate and forms the upper band of the policy corridor, while the Standing Deposit Facility rate, 25 bps below repo, has been the lower band since April 2022. R is correct — the MSF is an emergency overnight window for banks that have exhausted other options. However, R only describes the facility; the higher rate is a penal premium meant to discourage routine use, so R does not explain A.
- Constitution of the first Monetary Policy Committee
- Report of the Urjit Patel Committee
- Monetary Policy Framework Agreement between the Government and the RBI
- Amendment to the RBI Act through the Finance Act, 2016
The correct sequence is the Urjit Patel Committee report (January 2014) → Monetary Policy Framework Agreement (February 2015) → Finance Act 2016 amendment to the RBI Act (May 2016) → constitution of the MPC (September 2016). Option (a) places the MPC before its 2016 statutory basis, option (b) places the Agreement before the Committee whose 2014 recommendation it followed, and option (c) places the 2016 amendment before the 2015 Agreement.
Failure is deemed after three consecutive quarters of average inflation above the upper or below the lower tolerance level; the band notified in 2021 was 4% with ±2%. On failure, the RBI must report to the Central Government with the reasons, remedial actions and the time needed to return to target. The statutory period is three quarters, not two, four or five.
