Which of the following statements is/are correct regarding the Monetary Policy Committee (MPC)?

1. It decides the RBI's benchmark interest rates.
2. It is a 12-member body including the Governor of RBI and is reconstituted every year.
3. It functions under the chairmanship of the Union Finance Minister.

Select the correct answer using the code given below :

The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) has specific roles and a defined composition.

1. It decides the RBI’s benchmark interest rates: This statement is correct. The primary function of the MPC is to determine the policy interest rate (repo rate) required to achieve the inflation target set by the Government of India.
2. It is a 12-member body including the Governor of RBI and is reconstituted every year: This statement is incorrect. The MPC consists of six members – three officials of the Reserve Bank of India and three external members nominated by the Government of India. The RBI Governor is the ex-officio Chairperson of the MPC. It is not a 12-member body, nor is it reconstituted every year.
3. It functions under the chairmanship of the Union Finance Minister: This statement is incorrect. The MPC does not function under the chairmanship of the Union Finance Minister. As mentioned earlier, the Governor of the RBI is the ex-officio Chairperson of the MPC.