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MPC Meet Deferred as 3 Posts Lie Vacant; RBI to Announce New Dates

Earlier, the MPC was supposed to have met from 29 September to 1 October.

Updated
Business
2 min read
Reserve Bank of India (RBI)
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The Reserve Bank of India's (RBI) on Monday, 28 September, announced that the Monetary Policy Committee (MPC) meeting has been postponed. The meeting was scheduled to start on Tuesday, 29 September.

The centre did not provide any reason for rescheduling but the major reason for the decision is possibly the three vacant posts of external members, which the government has not filled so far.

The tenure of the three external members on the committee, Ravindra Dholakia, Chetan Ghate and Pami Dua ended in September, and the last MPC meeting was held in August, The Economic Times reported.

The quorum for the meeting of the MPC is four members, with each member having one vote. The six-person Monetary Policy Committee is currently without three external members after their terms expired in September.
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Calling the postponement of MPC meeting "shambolic" A. Prasanna, chief economist at ICICI Securities Primary Dealership Ltd. in Mumbai, told Business Standard that the government and the RBI had three months to appoint new members, but they failed to do so.

He also said that “monetary policy was the only lever providing support to the economy and such uncertainty doesn’t help,” according to Business Standard.

Meanwhile, Money Control in a report said that the government has selected new MPC members, but they are delaying the announcement. The report suggested that the government is currently completing the processes on background and security check before making the big announcement.

Three members of the panel are from the RBI, including the central bank's Governor and the rest three are external or independent members. The four-year terms of three external members of the MPC, appointed in 2016, ended last month and the vacant posts are yet to be filled by the government.

Analysts widely expected the MPC to hold the repo rate at the upcoming meet, ET reported.

“The meeting of the Monetary Policy Committee (MPC) during September 29, 30 and October 1, 2020... is being rescheduled,” the Reserve Bank said in a statement on Monday.

Sector experts have expressed astonishment over the delay as the MPC meeting and its decision on the policy rate has been playing a key in the monetary and liquidity situation in the country amid the pandemic.

Earlier, the MPC was supposed to have met from 29 September to 1 October.

(With inputs from IANS and The Economic Times, Money Control and Business Standard)

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