MONEY MARKET-Missing the Wood for the Trees

MONEY MARKET Missing the Wood for the Trees T K Velayudham ONE of the few fall-outs from the Sukhamoy Chakravarty committee report on the working of the monetary system, is the report of the working group on the money market, which has now come to be known as the Vaghul committee report. In pursuance of the Chakravarty committee's recommendations relating to the development of the money market, the Reserve Bank of India (RBI) appointed on September 5, 1986, a working group to examine the possibilities of enlarging the scope of the noney market and to recommend specific measures for evolving money market instruments. The specific terms of reference of the working group were: (i) to examine money market instruments and recommend specific measures for their development; (ii) to recommend the pattern of money market interest rates and to indicate whether these should be administered or determined by the market; (iii) to study the feasibility of increasing the participants in the money market; (iv) to assess the impact of changes in the cash credit system on the money market and to examine the need for developing specialised institutions such as discount houses, and in this context to examine the interaction between the inter-corporate market and the expanded money market; and (v) to consider any other issue having a bearing on the development of the money market.