Maarg Manthan · Topic 17.6

Reserve Bank of India Committees (Monetary Policy, Digital Lending, etc.)

Current Affairs & Government Schemes › Key Government Committees and Commissions · Topic 17.6

The Reserve Bank of India, set up in 1935 under the RBI Act, 1934, forms expert committees and working groups whose reports shape monetary policy, banking regulation and financial inclusion. The Urjit R. Patel Committee of 2014 led to flexible inflation targeting and the Monetary Policy Committee of 2016. The Bimal Jalan Committee of 2019 reviewed the economic capital framework. The Working Group on Digital Lending under Jayanta Kumar Dash reported in 2021 and led to the digital lending guidelines of 2022. In March 2026 the government kept the inflation target at 4 per cent with a band of 2 to 6 per cent for 2026-31.

6 min read · UPSC Prelims · Current Affairs & Government Schemes · Key Government Committees and Commissions

At a Glance

Regulator Reserve Bank of India, 1935
Monetary framework Urjit Patel Committee, 2014
Capital framework Bimal Jalan Committee, 2019
Fintech Digital Lending group, 2021
Inflation target 4 per cent, band 2 to 6, to March 2031
Exam link UPSC Prelims, Current Affairs and Government Schemes: Key Government Committees and Commissions

Where Does It Fit?

This topic connects the macro on committees to monetary and financial policy. The later topics on older committees for insurance, derivatives and microfinance show how each reform wave began with an expert report. Previous topic: Committees on One Nation One Election. Next topic: Standing Committees and Parliamentary Committees in the News.

Which RBI Committees Matter Most?

Committee	Subject and result
Urjit R. Patel Committee (2014)	Report on the revised monetary policy framework. It recommended the new Consumer Price Index as the nominal anchor, an inflation target of 4 per cent with a band of plus or minus 2 per cent, and a Monetary Policy Committee
Bimal Jalan Committee (2019)	Reviewed the economic capital framework of the RBI. It advised a risk provisioning range and a transfer of surplus, which led to a transfer of Rs 1.76 lakh crore to the government in August 2019
Nachiket Mor Committee (2013)	On comprehensive financial services for small businesses and low-income households. It suggested payments banks and small banks, which were later licensed
P.J. Nayak Committee (2014)	On governance of bank boards. It suggested reducing government holding and setting up a Bank Investment Company
Digital Lending Working Group (2021)	Under Jayanta Kumar Dash, it suggested a nodal agency, a public register of lending apps and curbs on unregulated digital lenders
Internal Working Group on ownership (2020)	Under P.K. Mohanty, it suggested raising the promoter cap in private banks and allowing large corporates to own banks subject to safeguards

What Changed in Monetary Policy After 2014?

Flexible inflation targeting: The Monetary Policy Framework Agreement of February 2015 between the government and the RBI set the target, and the RBI Act was amended in 2016 to give it a legal base in Section 45ZA
Monetary Policy Committee: Six members, three from the RBI including the Governor who has a casting vote, and three external members appointed by the government. It decides the repo rate
Target: The target is 4 per cent for CPI Combined inflation with a tolerance band of 2 to 6 per cent
Failure rule: If inflation stays above 6 per cent or below 2 per cent for three consecutive quarters, the RBI must report to the government on reasons and remedies
2026 review: As reported, the government notified in March 2026 that the target stays at 4 per cent with the same band for the five years to March 2031
Earlier review: The first five-year review in 2021 also kept the same target and band for 2021-26
Link with growth: The framework asks the RBI to keep inflation stable while supporting growth, and critics ask whether food price shocks should be excluded from the target
Link with Economic Survey: The yearly review of inflation and growth appears in the Economic Survey, as in Economic Survey of India (Annual)

What Else Should You Remember?

Digital lending guidelines: Based on the Dash group report, the RBI issued digital lending guidelines in September 2022. Loans must be disbursed directly into the borrower bank account, with a key fact statement, a cooling-off period and clear disclosure of the lending service providers
Digital Lending Directions: The RBI issued fresh directions in 2025 that consolidate the rules for regulated entities and set norms for lending service providers, as reported
Digital lending apps register: The RBI has asked for a public directory of digital lending apps used by regulated entities, to help borrowers spot unauthorised apps
Payments banks: Following the Nachiket Mor recommendations, licences for payments banks and small finance banks were granted in 2015. Airtel Payments Bank and India Post Payments Bank are examples
Capital framework: The Jalan Committee asked for a Contingent Risk Buffer within a range, with a wider range of realised equity, and transfer of the rest to the government
Other committee work: Committees have also looked at urban co-operative banks, asset reconstruction, microfinance, and a regulatory framework for Non-Banking Financial Companies, as in Y.H. Malegam Committee on Microfinance Institutions and NBFC Regulation
RBI Act link: The Governor, Deputy Governors and the Central Board are provided for in the RBI Act, 1934, and the Governor is appointed by the central government
Reports: The RBI also publishes the Report on Currency and Finance, the Financial Stability Report and the Report on Trend and Progress of Banking
Financial inclusion: The RBI Financial Inclusion Index tracks access, usage and quality, as in Financial Inclusion Index (Reserve Bank of India)
Caution on claims: Committee reports are advisory. The RBI or the government may accept, modify or reject them, so each outcome should be read from the later circular or law

Why Does It Matter for the Exam?

Committee and subject: Urjit Patel for monetary policy, Jalan for capital, Dash for digital lending
Numbers: 4 per cent target, 2 to 6 band, six members in the MPC
Year: 2014 report, 2016 amendment, 2015 agreement
Statute: Section 45ZA of the RBI Act
Common errors: Mixing the Urjit Patel and Bimal Jalan committees or saying the Governor has no casting vote

As an analytical point, expert committees give the RBI a way to test reforms before they are put into rules. The best reports pair clear goals with transparent review, so that rules on fintech, capital and inflation keep pace with change.

Why Is This Topic Important?

Committees Matching of name and subject
Inflation Framework numbers
Fintech Digital lending rules

What Came Next?

The next topic covers parliamentary committees that appear in the news. Next topic: Standing Committees and Parliamentary Committees in the News.

Key People and Terms

Repo rate Rate at which RBI lends to banks
CPI Consumer Price Index
Casting vote Governor breaks a tie
Economic capital Reserves held against risk
Digital lending Loans through apps and platforms
Payments bank Bank for payments and deposits

Exam Corner

Points to Remember

Inflation target: 4 per cent, band 2 to 6.
Urjit Patel: 2014, MPC.
Jalan: 2019, surplus transfer.
MPC has six members.
Dash group: digital lending.

Do Not Confuse With

Urjit Patel and Bimal Jalan committees Monetary framework versus capital framework
Nachiket Mor and Malegam committees Financial inclusion versus microfinance rules
MPC and RBI Board Repo rate body versus central board

Memory Hook

Patel set the target, Jalan set the surplus, Dash set the app rules.

Mains Angle

Mains questions ask about monetary policy and fintech regulation. These points give a balanced frame.

Policy Inflation targeting results
Risk Digital lending harms
Way Clear rules and review

A Question You May Face

An original practice question, not a past paper question.

“Discuss how the recommendations of RBI committees have shaped monetary policy and the regulation of digital lending in India.”

How to Answer

Monetary Patel and MPC.
Capital Jalan surplus.
Fintech Dash guidelines.
Way Review and clarity.

GS Relevance

Prelims: RBI committees and their subject, Monetary Policy Committee. GS Paper 3: banking, monetary policy, financial inclusion, fintech regulation.

Frequently Asked Questions

What did the Urjit Patel Committee recommend?

The Urjit Patel Committee of 2014 recommended that the RBI adopt the Consumer Price Index as the nominal anchor and a target of 4 per cent inflation with a band of plus or minus 2 per cent. It also recommended a Monetary Policy Committee, which was set up in 2016 under the amended RBI Act.

What is the current inflation target in India?

The inflation target is 4 per cent measured by CPI Combined, with a tolerance band of 2 to 6 per cent. As reported, the government notified in March 2026 that the same target and band would continue for the five years from April 2026 to March 2031.

What was the Bimal Jalan Committee about?

The Bimal Jalan Committee of 2019 reviewed the economic capital framework of the Reserve Bank of India. Its advice on the level of reserves and the transfer of surplus led to a transfer of about Rs 1.76 lakh crore from the RBI to the government in August 2019.

What is the Digital Lending Working Group?

The Working Group on Digital Lending, headed by Jayanta Kumar Dash and set up in 2021, studied loans offered through apps. Its report led to the RBI digital lending guidelines of 2022, which require direct disbursal to the borrower account, a key fact statement and clear disclosure of lending partners.

How many members are there in the Monetary Policy Committee?

The Monetary Policy Committee has six members, three from the RBI, including the Governor, and three external members appointed by the central government. The Governor has a casting vote in case of a tie. The committee decides the policy repo rate to meet the inflation target.

PYQ Practice — Statement Analysis

1 The Urjit Patel Committee recommended a Monetary Policy Committee.

True

It also recommended CPI as the anchor.

2 The Bimal Jalan Committee reviewed the Financial Inclusion Index.

False

It reviewed the economic capital framework of the RBI.

3 The Monetary Policy Committee has six members.