association of india as a self - regulatory organisation formed by authorised dealers plays a constructive role in market development by initiating debates on important issues, organising training programmes and providing technical expertise on various matters. we expect the fedai to enhance its catalytic role in market development in the years ahead. to further the participatory process in a more holistic manner by taking into account all segments of the financial markets, the ambit of the technical advisory committee ( tac ) on money and securities markets set up by rbi in 1999 has been expanded in 2004 to include forex markets and the committee has been renamed as tac on money, securities and forex markets. tasks ahead the reserve bank will continue to adopt an approach characterised by gradualism in respect of future liberalisation of forex markets. in terms of sequencing, forex markets have to be aligned to external sector reforms and development of financial markets as part of overall reform. there are several aspects of reform in external sector and forex markets is one of them. therefore, further liberalisation in forex markets have to be harmonised with progress in other areas. as you are aware, all major reforms in the market have been brought about after soliciting the opinions of market participants and thus the system of participatory process in market development is very much in place and will continue. in order to further the participatory process, i am happy to inform you that yesterday i had discussions with my colleague dr. rakesh mohan and governor dr. reddy. it has been decided that rbi will immediately set up a committee to undertake a comprehensive review of the liberalisation process set in motion in the last decade, study recent international experience and identify various options for future forex market development in india. the committee will interact with market participants and experts for this purpose. the committee will prepare a report within three months which will be placed before tac. the report will then be placed in the public domain for nviting suggestions. on the basis of the suggestions received, a road map will be drawn up for further liberalisation to reach global standards. no doubt we will be associating, as usual, the forex association to assist us in this endeavour. let me conclude by thanking the assembly for giving this opportunity. our officers are also participating in the deliberations and we will get a feedback from them. wish you all the best in your endeavours.

such report with reference to september 30, 2003 was put in public domain through websites of both the government of india and rbi in february 2004. the second report on foreign exchange reserves with reference to march 31, 2004 is now available at rbi website. institutional development it has been well documented that the vast size of daily foreign exchange trading, combined with the global interdependencies of the forex market and payment systems involves risks stemming from settlement of forex trades on gross basis. settlement of forex transactions spans different time zones and payment systems. as a result, counterparties assume various types of risks in the course of settlement. as suggested by the sodhani committee, rbi took the initiative to establish ccil in 2001 to mitigate risks in the indian financial markets. as india ’ s first centralised clearing and settlement system for the financial sector, ccil ’ s role in facilitating settlement of both debt and forex transactions is perhaps unique. ccil undertakes settlement of forex trades on a multilateral net basis through a process of novation and all trades accepted are guaranteed for settlement. on an average, ccil daily settles over 3500 deals covering an average gross volume of around us $ 3. 5 billion, representing over 80 % of the market. ccil has been able to offer netting advantage consistently. in addition to benefits of risk mitigation, ccil ’ s intermediation also provides to its members other tangible benefits such as improved efficiency, lower operational cost and easier reconciliation of accounts with correspondents. ccil has improved operational efficiency with a zero failure rate. we will be happy to share our experience with our asian friends. since it started its operations, ccil has consistently endeavoured to add value to the services, and has gradually brought the entire gamut of forex transactions under its purview. it has also, over time, added more and more functionalities enhancing the value of its product. similarly, ccil has also launched a forex trading platform to facilitate us dollar / rupee deals by banks in india. this platform has been given to members free of cost. the platform offers both order matching and negotiation modes for dealing. the usp of the platform is its offer of straight - through processing capabilities as it is linked to ccil ’ s settlement platform. rbi encourages the authorised dealers to take full advantage of this and intends monitoring the use of this platform to make it more user friendly and widely used. in india, the foreign exchange dealers