RESERVE BANK OF INDIA
(Monetary Policy Department)
Mumbai, the 14th July, 2017
Reserve Bank of India Monetary Policy Committee and Monetary Policy Process Regulations, 2016
No. M.P.D.P.M.D.No. 17/02.02.015/17-18.—In exercise of the powers conferred by clause (qa), (qb), (qc), (qd) and (qe) of Section 58 of the Reserve Bank of India Act, 1934 (2 of 1934) amended in 2016, the Central Board of the Reserve Bank of India, with the previous sanction of the Central Government, hereby makes the following regulations:—
Monetary Policy Process
1. (i) These regulations shall be called as the Reserve Bank of India Monetary Policy Committee and Monetary Policy Process Regulations, 2016.
(ii) They shall come into force effective from 1st August, 2016.
2. In these regulations:
a) “the Act” means the Reserve Bank of India Act, 1934 (2 of 1934);
b) “the Bank” means the Reserve Bank of India;
c) “the Board” means the Central Board of the Reserve Bank of India;
d) “Committee” means the Monetary Policy Committee (MPC) constituted under sub-section 1 of Section 45ZB of the Reserve Bank of India Act, 1934 (2 of 1934);
e) “Members” means members of the Monetary Policy Committee appointed by the Central Government under sub-section (2) of Section 45ZB of the Reserve Bank of India Act, 1934 (2 of 1934);
f) “Secretary” means the secretary to the Monetary Policy Committee;
g) “Monetary Policy Report” means the Monetary Policy Report as mentioned in Section 45ZM of the Act;
h) Other expressions used but not defined in these Regulations and used in the Act have the meanings respectively assigned to them in the Act.
Remuneration and other allowances payable to the members.
3. (i) Members appointed under clause (d) of sub-section (2) of section 45ZB of the Act shall receive a remuneration of Rs 1,50,000 (rupees one lakh fifty thousand) for devoting time and work for each meeting of the Committee to be conducted under sub-section (1) of section 45ZI of the Act which they attend and other expenses relating to air travel, local transportation and accommodation as may be decided by the Central Board from time to time.
(ii) The Secretary to the MPC shall make arrangements to provide logistical support to members appointed under clause (d) of sub-section (2) of section 45ZB of the Act during each MPC meeting to be conducted under sub-section (1) of section 45ZI of the Act.
Functions and manner in which the Secretary shall perform the functions
4. (i) The head of the Monetary Policy Department (MPD) shall be the Secretary to the committee. In his/her absence, the representative nominated by him/her not below the rank of senior officer in MPD shall function as the Secretary.
(ii) Role and Functions of the Secretary and Secretariat
a) Assist the MPC in smooth conduct of all its meetings, and ensure that the processes set out at regulation 5(i) below are followed in letter and spirit;
b) Assist in preparing the agenda for every MPC meeting;
c) Ensure that analytical and data requirements for MPC meetings and of members are met through an effective coordination mechanism involving staff across various departments of the Bank;
d) Prepare (i) draft policy proposal (resolution and statement) for voting by the MPC; (ii) minutes/proceedings of MPC meetings; and (iii) ensure release of policy resolution and statement as well as minutes after the MPC’s approval in accordance with the schedule;
e) Record and preserve minutes of all meetings; and
f) Assume responsibility for publication of documents.
Procedure, conduct, code of confidentiality and other matters
5. (i) The Monetary Policy Process
(a) The schedule of monetary policy voting/decision meetings for the entire fiscal year shall be announced in advance.
(b) Ordinarily not less than fifteen days notice shall be given to members for meetings of the Committee. Should it be found necessary to convene an emergency meeting, 24 hours’ notice shall be given to every member to enable him/her to attend, with technologyenabled arrangements for even shorter notice period for meetings.
(c) The duration of monetary policy meetings shall be such as decided by the Committee. The policy resolution will be publicly released after the conclusion of the MPC meeting keeping in view the functioning and timing of financial markets.
(d) The resolution shall include the policy repo rate, and at the discretion of the Chairperson, any other monetary policy measures including those relating to the operating framework of monetary policy.
(e) Minutes of the decision making meeting(s) shall include: (a) the resolution adopted by the MPC; (b) the voting of each member on the resolution; and (c) short written statements of individual members justifying the vote, consistent with the provisions of Section 45ZL of the Act. Minutes shall be released at 5 pm on the 14th day from the date of the policy day (or next earliest working day, if a holiday in Mumbai).
(ii) Code of Conduct for MPC Members
This code aims at providing broad guidance to members of the MPC on their ethical conduct, which shall help enhance public trust and confidence in the Bank and its policies.
• MPC members shall act in a manner consistent with the integrity, dignity and reputation of their office.
• MPC members shall be guided by the objectives of monetary policy set out in the Act and the inflation target set by the Central Government, and shall independently and candidly express their views in the MPC meetings before voting.
• Members shall take adequate precaution to ensure utmost confidentiality of the MPC’s policy decision before it is made public and preserve confidentiality about the decision making process.
• While interacting with profit-making organizations or making personal financial decisions, they shall be mindful of, and weigh carefully, any scope for conflict between personal interest and public interest.
External Communication Policy
• Members shall observe a silent or blackout period, starting seven days before the voting/decision day, and ending seven days after the day policy is announced. During this period, they will avoid public comment on issues related to monetary policy, other than through the MPC’s communication framework.
• Members shall ensure that personal views expressed outside the silent or blackout period are attributable only to themselves, and that no confidential information accessed during the monetary policy deliberations is revealed outside the Committee.
• Members shall not use resources made available by the Bank (including human resources) for private/ commercial gain.
Internal Communication and Information Seeking
Members seeking information from the Bank under sub-section (1) and sub-section (2) of section 45ZH of the Act shall make requests to the Secretary only. All internal communication of members with the staff of the Bank shall be through the Secretary only.
Code for Personal Financial Transactions
After their appointment, members shall disclose their assets and liabilities in a document held by the Secretary of the Committee. This information shall be updated once every year.
Code for High Ethical Standards
Members shall maintain the highest standards of probity consistent with public office. Oath of Secrecy
Before the first formal meeting of the MPC, every new member shall sign a declaration in the form set out in the Schedule pledging not to reveal any of the nonpublic matters which may come to his/her knowledge in the discharge of his/her duties, except when required or authorised to do so by the Board or by law.
The Chairperson of the Committee shall forthwith inform the Central Government, if and when it comes to the notice of the Committee, that a member has become subject to any of the disqualifications specified in section 45ZC or section 45ZE of the Act.
Every member shall be indemnified by the Bank against all losses and expenses incurred in discharging assigned duties, except such as may happen from his/her own wilful act or default.
Document 1 (The Bank shall publish a Document explaining the steps to be taken by it to implement the decisions of the Committee as required in Section 45ZJ of the Act.)
6. (i) The operating procedure of monetary policy – or the framework to implement monetary policy decisions – shall be reviewed and explained in the bi-annual Monetary Policy Reports (MPRs).
Monetary policy changes involving instruments other than the repo rate and the operating procedure as decided by the MPC shall be explained in the policy statement, followed by a press release setting out details on implementation. Document
(2) (The forms and contents of the Monetary Policy Report to be published under sub-section (2) of section 45ZM.)
(ii) The Bank shall publish the Monetary Policy Report (MPR) once in every six months. The Monetary Policy Report shall contain the following:
(a) Explanation of inflation dynamics in the last six months and the near term inflation outlook;
(b) Projections of inflation and growth and the balance of risks;
(c) An assessment of the state of the economy, covering the real economy, financial markets and stability, fiscal situation, and the external sector, which may entail a bearing on monetary policy decisions;
(d) An updated review of the operating procedure of monetary policy; and
(e) An assessment of projection performance.
Form of the MPR
The MPR shall be released on the Bank website within 24 hours of the release of the relevant policy statement.
Process to be followed in the event of a failure to meet the inflation target
7. The Secretary to the Committee shall schedule a separate meeting as part of the normal policy process to discuss and draft the report to be sent to the Central Government under the provisions of Section 45ZN of the Act. The Report shall be sent to the Central Government within one month from the date on which the Bank has failed to meet the inflation target. The Bank shall send the report to the Central Government in the event of a failure to achieve the target as specified by Rules of the Central Government, in this regard.
THE SCHEDULE [vide Regulation 5(ii)] FORM OF DECLARATION OF FIDELITY AND SECRECY
I, on becoming a member of the Monetary Policy Committee (MPC), do solemnly and sincerely declare that I shall faithfully perform the duties to the best of my ability and that I will uphold the dignity of the position and that I will observe secrecy and will not directly or indirectly communicate or divulge any of the matters or any information which may come to my knowledge in the discharge of my duties, except when required or authorised to do so by these Regulations / Central Board of the Bank or by law.
M.D. PATRA, Executive Director