Date:07/07/2005 URL: http://www.thehindubusinessline.com/2005/07/07/stories/2005070702470300.htm

Back RBI sets up dept to track financial markets

Our Bureau

Mumbai , July 6

THE Reserve Bank of India has decided to closely track the financial markets. Towards this, the RBI today set up a separate department called Financial Markets Department (FMD).

The FMD will be under Dr Rakesh Mohan, who took over as Deputy Governor of the RBI on July 2.

This is probably for the first time that the RBI has constituted a separate department for tracking financial markets.

Dr Mohan, who has been appointed for five years, will also be in charge of the Monetary Policy Department, which was looked after by the Deputy Governor, Ms Shyamala Gopinath.

Dr Mohan is the fourth Deputy Governor. The other two are Ms K.J. Udeshi and Mr V. Leeladhar.

The constitution of the new department is aimed at moving towards a functional separation between debt management and monetary operations.

It will handle open market operations, liquidity adjustment facility, standing liquidity facilities, and market stabilisation scheme.

The FMD will also be responsible for regulation and development of money market instruments and monitoring of Government securities and forex markets.

In due course, the Department's functions would cover the RBI's operations in the domestic foreign exchange market to achieve the desired integration in the apex bank's conduct of monetary operations, said a release.

As Deputy Governor, Dr Mohan will also look after the Department of Statistical Analysis and Computer Services, the Department of Economic Analysis and Policy, and the Secretary's Department, apart from co-ordination work.

Dr Mohan, who was earlier appointed as Deputy Governor of the RBI for three years from September 2002, relinquished the post in October 2004 when he was appointed Secretary, Department of Economic Affairs.