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Date : 04 Oct 2010
Working Group on Operating Procedure of Monetary Policy

In pursuance of the announcement made in the First Quarter Review of Monetary Policy for 2010-11, the Reserve Bank has constituted a Working Group to review the current operating procedure of monetary policy in India, including Liquidity Adjustment Facility (LAF).

The terms of reference of the Working Group finalised in the light of comments received in response to the Reserve Bank’s press release of September 13,  2010 are:

(i) to survey the operating procedures of major central banks;

(ii) to review the current operating procedure of monetary policy in India, in particular, the Liquidity Adjustment Facility (LAF);

(iii)  to examine the operation of the LAF with regard to:

a. the width of the corridor
b. the frequency and timing of auctions
c. the maturity period of repo and reverse repo operations;

(iv) to assess the role of the Bank Rate;

(v) to examine the role of standing facilities such as the export credit refinance; and

(vi) to suggest changes to the current operating procedure of monetary policy in India in the light of international practices and domestic experience, with particular reference to:

a) whether there should be a corridor at all

b) if so, whether its width should be fixed or variable under specified conditions

c) if so, what instruments/mechanisms may be necessary to enable the corridor to function efficiently.

It was indicated in the Press Release of September 13, 2010 that the Working Group would be chaired by Shri Deepak Mohanty, Executive Director, Reserve Bank of India and will have representations from Indian Banks' Association (IBA), Fixed Income Money Market and Derivatives Association of India (FIMMDA) and concerned departments of the Reserve Bank. The Group would also include external experts.

Accordingly, the constitution of the Working Group will be as follows:

i)

Shri Deepak Mohanty
Executive Director
Reserve Bank of India

Chairman

ii)

Professor Ashima Goyal
Indira Gandhi Institute of Development Research (IGIDR)

Member

ii)

Shri B.Mahapatra
Chief General Manager-in-Charge
Department of Banking Operations and Development
Reserve Bank of India

Member

iii)

Dr. Janak Raj
Adviser-in-Charge
Monetary Policy Department
Reserve Bank of India

Member

iv)

Shri K.K.Vohra
Chief General Manager
Internal Debt Management Department
Reserve Bank of India

Member

v)

Shri P.Krishnamurthy
Chief General Manager
Financial Markets Department
Reserve Bank of India

Member

vi)

Representative of Indian Banks' Association (IBA)

Member

vii)

Shri Saugata Bhattacharya
Senior Vice President and Chief Economist
Axis Bank

Member

viii)

Ms. Shilpa Kumar
Chairperson
Fixed Income Money Market and Derivatives Association of India (FIMMDA)

Member

ix)

Shri Amitava Sardar
Adviser
Monetary Policy Department
Reserve Bank of India

Member-Secretary

The secretarial support to the Working Group would be provided by the Monetary Policy Department (MPD) of the Reserve Bank of India.

The Working Group is expected to submit its Report within three months from the date of its first meeting.

Alpana Killawala
Chief General Manager

Press Release : 2010-2011/474

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