Monetary Policy Transmission — Policy Changes

Entry	Year	Description	Impact
RBI Act Amendment 2016	2016	Established the Monetary Policy Committee (MPC) as a statutory body with six members including RBI Governor as chairperson, three RBI officials, and three external members appointed by the government. Formalized flexible inflation targeting framework with numerical target of 4% CPI inflation with tolerance band of +/- 2%.	Transformed monetary policy decision-making from individual Governor's discretion to committee-based approach, enhanced transparency through published minutes, and provided clear mandate for price stability while considering growth objectives, significantly improving the institutional framework for monetary policy transmission.
Banking Regulation Act Amendment 2020	2020	Brought cooperative banks under RBI's direct supervision and regulation, extending RBI's regulatory authority over a broader spectrum of financial institutions involved in credit intermediation and monetary policy transmission.	Expanded the scope of monetary policy transmission by bringing cooperative banks, which serve significant rural and semi-urban populations, under uniform regulatory framework, potentially improving transmission effectiveness in previously underregulated segments of the financial system.

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