The Reserve Bank of India (RBI) has approached the Centre seeking an extension of tenure of external members on its rate-setting panel until March, 2021 in the wake of the COVID-19 pandemic.
The apex bank has written a letter to the Finance Ministry regarding this, which is considering it, government officials in the know of the matter told Bloomberg.
Three out of the six-member Monetary Policy Committee (MPC) are external delegates appointed to the panel for a term of four years and are not eligible for re-appointment, as per the rules.
The three external members on the rate-setting panel are Ravindra Dholakia, Pami Dua, and Chetan Ghate. They were appointed to the MPC in the year 2016 with a mandate to aim consumer prices within a 2-6% range. The external members' term is due to end in September this year.
The MPC has slashed the benchmark repo rate by 115 bps (basis points) so far this year to restore economic growth as the Indian economy is headed towards its first recession in over four decades.
The panel has met three times since the COVID-19 outbreak- on March 27, April 17 and May 22 - to announce monetary and regulatory measures for stressed borrowers.
Meanwhile, the Consumer Price Index (CPI)-based inflation is over the medium-target of 4%.
However, the RBI hopes that it will alleviate in the coming months, letting the central bank follow an accommodative policy stance. This means RBI will cut rates to infuse money into the financial system whenever needed.