The Hindu Business Line : RBI panel on capital account convertibility

The Reserve Bank of India has appointed a committee headed by Mr S.S. Tarapore, former Deputy Governor of RBI, to prepare roadmap on full capital account convertibility.

The Prime Minister, Dr Manmohan Singh, on Saturday asked the Finance Minister and the RBI to prepare a roadmap for moving towards capital account convertibility.

The full convertibility of the Indian currency means that the rupee would be made freely exchangeable into other currencies and vice versa. This would also mean that international investors can buy and sell Indian assets at will.

Terms of reference

The terms of reference of the committee are: To review the measures of capital account liberalisation in India so far; to examine implications of fuller capital account convertibility on monetary and exchange rate management, financial markets and financial system; to study the impact of dollarisation in India of domestic assets and liabilities and internationalisation of the rupee; to provide a comprehensive medium-term operational framework, with sequencing and timing, for fuller capital account convertibility taking into account these implications and progress in revenue and fiscal deficit of; to survey the regulatory framework in countries which have full capital account convertibility; to suggest appropriate policy measures and prudential safe guards to ensure monetary and financial stability and to make other relevant recommendations.

Report by July 31

The committee will commence work from May 1, and is expected to submit its report on July 31, the RBI said.

The other members of the committee include Dr Surjit Bhalla, Mr M.G. Bhide, Dr R.H. Patil, Mr A.V. Rajawade and Dr Ajit Ranade.

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