How is the Monetary Policy Committee constituted under the Reserve Bank of India Act, 1934? What are its functions? Explain.

Section 45ZB of the Reserve Bank of India Act, 1934 empowers the Central Government to constitute the Monetary Policy Committee of the Reserve Bank of India. The Monetary Policy Committee shall consist of the following Members, namely:- the Governor of the Bank—Chairperson, ex officio; Deputy Governor of the Bank, in charge of Monetary Policy—Member, ex officio; one officer of the Bank to be nominated by the Central Board—Member, ex officio; and three persons to be appointed by the Central Government—Members. The Monetary Policy Committee shall determine the Policy Rate required to achieve the inflation target. The decision of the Monetary Policy Committee shall be binding on the Reserve Bank of India and the RBI is required to publish a document explaining the steps to be taken to implement the decisions of the Monetary Policy Committee.