Explained: Why RBI postponed its Monetary Policy Committee meeting

Several sectors were expecting big announcements from Reserve Bank of India, ahead of the festive season but much to their disappointment, the meeting of the Monetary Policy Committee has been postponed for now. The RBI on Monday said that the meeting of the MPC between 29, 30 September and 1 October, 2020 as announced is being rescheduled. The dates of the bimonthly MPC’s meeting will be announced shortly, the central bank said. 

The six-member Monetary Policy Committee (MPC) headed by RBI Governor Shaktikanta Das was scheduled to meet for three days starting 29 September. The resolution of the MPC would be announced on 1 October. 

Why was RBI MPC postponed? 

One reason is that the tenure of three external members on the committee ended in September. After this, Ravindra Dholakia, Chetan Ghate and Pami Dua stepped down from the panel. The government is yet to make the new appointments to the committee. Without the external members, only the RBI appointees remain on the committee. These include Governor Shaktikanta Das, Deputy Governor Michael Patra and Executive Director Mridul Saggar. 

The other thing is that on Monday, Centre informed the Supreme Court that a decision is likely in 2-3 days over charging of interest by banks on instalments, which were deferred during the moratorium period in view of the Covid-19 pandemic. The top court asked the Centre to bring the decision on record and circulate the affidavit to the parties in a batch of pleas challenging interest on deferred instalments. 

As per the Reserve Bank of India Act, 1934, the central bank is required to organise at least four meetings of MPC in a year. The 29 September-1 October MPC would have been the 25th meeting of the rate setting panel. 

In its last MPC meeting in August, RBI kept policy rates unchanged to help tame inflation. The RBI has cut policy rates by 115 basis points since February.