mou, an indicative schedule for issuance of such securities covering the first quarter of 2004 - 05 with a total auction amount of rs. 35, 500 crore has already been announced. the indicative schedule for auctions under mss is subject to variations if market conditions so warrant. these securities would be managed and maintained by the reserve bank and would be no different from other gilts, except that the proceeds from these would remain with the reserve bank. thus, the mss provides an additional instrument of liquidity management to the reserve bank, without segmenting the government securities market. it would help in absorbing enduring liquidity in the system and in the process facilitate laf to focus on day - to - day monetary and liquidity management. we have also announced some changes in the laf scheme. the revised scheme provides for daily 7 - day repo and daily overnight fixed rate reverse repo, both to be conducted on week days. the 14 - day repo is being retained for the time being. the spread between repo rate and reverse repo rate has been reduced from 200 basis points to 150 basis points, with the 7 - day repo rate at 4. 5 per cent and overnight reverse repo rate at 6. 0 per cent. also, the entire amount of support under the standing liquidity facilities for export credit refinance for banks and liquidity support to primary dealers ( pds ), is now available at a single rate, viz., the reverse repo rate. this would result in some reduction in costs of funds for banks and pds. under the revised scheme, the reserve bank will, however, continue to have discretion to conduct overnight repo or longer term auctions at a fixed rate or at a variable rate depending on market conditions and other relevant factors. reserve bank will also have the discretion to change the spread between the repo rate and reverse repo rate as and when appropriate. it is expected that these measures under laf and the mss will enable the reserve bank to improve liquidity management in the system, to maintain stability in the foreign exchange market and to conduct monetary policy in accordance with the stated objectives. we have also encouraged banks to be more transparent on their interest rates. we have continued our efforts in this direction in a consultative manner and in the november 2003 policy review, had requested indian banks association ( iba ) to advise its members suitably on the implementation of a scheme of benchmark prime lending rate ( bplr )

the first three quarters of 2003 - 04, for which data are available, the current account surplus was us $ 3. 2 billion, higher than us $ 2. 9 billion in the corresponding period a year ago. capital inflows continue to remain robust. in the recent period, reserve accretion has been largely reflecting both comfortable liquidity prevalent in the global economy and the underscoring of confidence by the international community in the indian economy. during 2003 - 04, the foreign exchange reserves increased by us $ 36 billion to us $ 111. 7 billion as at end - march 2004. during 2003 - 04, the significant increase in forex reserves has been accompanied by ( i ) smooth redemption of us $ 5. 5 billion of resurgent india bonds ( rib ), ( ii ) prepayment of certain high - cost foreign currency loans of the government of india amounting to us $ 3. 7 billion and ( iii ) india participating in the imf ’ s financial support to burundi, brazil and indonesia to the extent of us $ 561 million. the data available regarding sources of accretion of reserves for the first three quarters show that foreign investments ( direct and portfolio ) increased by us $ 10. 1 billion. nri deposit flows added us $ 3. 5 billion against us $ 2. 4 billion last year. short - term credits have also risen to us $ 2. 4 billion from meagre us $ 0. 4 billion. the level of the reserves now roughly equals the external debt of us $ 112. 1 billion. follow - up measures the reserve bank set up two internal groups, one on liquidity adjustment facility ( laf ) and the other on instruments of sterilisation. based on the recommendations in these respects and the feedback from market participants, the rbi worked closely with government to facilitate fine - tuning of the operating procedures and instruments to meet the new challenges. a memorandum of understanding ( mou ) was signed between the government of india and the reserve bank on march 25, 2004 detailing the rationale and operational modalities of the market stabilisation scheme ( mss ). under the mss scheme, the government has agreed to the issuance of treasury bills and dated government securities with an overall ceiling of rs. 60, 000 crore for the year 2004 - 05. if the outstanding amount of issues under mss touches a threshold limit of rs. 50, 000 crore, the ceiling and the threshold are subject to review. following the