through ad hoc treasury bills in favour of the government. However, this should be conditional on a significant reduction in interest/discount rates on government bonds. Why should the government have had to pay a discount rate of over 8 per cent on 91-day treasury bills when the call money rate was moving within a narrow range of 4.25 to 5 per cent? But that option has been foreclosed by a variety of premature policy actions in the name of financial sector reforms, such as, the withdrawal of the ceiling on short-term deposit rates of banks, the commitment to reduce the banks' cash reserve and statutory liquidity ratios drastically and the prescription of so-called capital adequacy norms for banks