MUMBAI (TIP): The Reserve Bank of India (RBI) has moved a step closer to shifting monetary policy decisions from the governor to the Monetary Policy Committee (MPC). In their meeting in Bengaluru on Thursday, the board of directors of the central bank took up the issue of the constitution of the MPC, raising expectations that the forthcoming policy review in August might be decided by a panel instead of governor Raghuram Rajan.

Last week on June 27, the government notified the rules governing the procedure for selection of MPC members. The rules also contain terms and conditions of their appointment and factors under which the MPC would be considered to have failed to meet the inflation target.

Out of the six MPC members, three will be the RBI governor, who will be the ex-officio chairperson, an RBI deputy governor, and one more officer from the central bank. The other three members of MPC will be economic experts appointed by the government on recommendations of a panel headed by the Cabinet secretary. The members will have a four-year term and shall not be eligible for reappointment.

The central bank’s board meeting in Bengaluru, which took place after a gap of seven years, was attended by deputy governors Urjit Patel, R Gandhi, S S Mundra and N S Vishwanathan. Other external directors included Nachiket M Mor, Damodar Acharya, Natarajan Chandrasekaran, Bharat Doshi and Sudhir Mankad. The meeting was also attended by government nominee director on the central board, Shaktikanta Das, who is the secretary, department of economic affairs.

In the meeting, the board discussed macroeconomic developments and two other specific areas of operations of the RBI — the central bank’s budget and activities of the board for payment and settlement system for the year ended March 2016 and discussed the draft annual report for 2015-16.