RBI forms panel for consultation on financial markets, emerging risks

The Reserve Bank of India (RBI) has formed a Technical Consultative Committee for Financial Markets (TCCFM), headed by deputy governor in-charge of Financial Markets Regulation Department, currently Rohit Jain, against the backdrop of rapidly evolving financial markets and infrastructure. The panel, which will have seven external members, will meet at least once in a quarter. 

“The committee will serve as a forum for structured engagement with market participants and stakeholders by the Reserve Bank on policy and operational matters related to money, government securities and foreign exchange markets as well as the respective derivative markets and infrastructure,” RBI said in a press release. The central bank had said such a committee will be formed during the October review of monetary policy, details of which were announced on Tuesday. 

The committee is formed at a time when there is volatility in the financial markets, mainly due to the geopolitical conflicts, resulting in elevated energy prices. There have been relentless outflows of foreign investors from equity markets in the past two years though there have been some inflows in the past few days. 

Foreign exchanges reserves, on the other hand, fell $66 billion in the past seven weeks after hitting fresh high of $785.7 billion in the week ended September 4, 2026, as the central bank sold dollars in the foreign exchange market to curb volatility. Against this backdrop, the central bank has kick started a rate hike cycle last month, and wants to ensure transmission of monetary policy rates. 

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In the past, there has been a technical advisory committee on monetary policy, which was discontinued after the flexible inflation targeting regime was operationalised in October 2016 with the six-member monetary policy committee. 

Market participants said the central bank has been consulting with market participants over the years, now such deliberations have been formalised. “The members will provide market feedback to the regulator, may be on products, what measures can be taken when there is untoward volatility,” said a market participant. 

The members cover a wide spectrum of the financial sectors, which includes public sector, private sector and foreign banks, treasury experts and equity market specialists, and experts having experience in regulatory bodies. The terms of reference include issues related to the functioning, efficiency, liquidity and resilience of the money, government securities, foreign exchange and related derivative markets, and identification of measures to deepen and broaden these markets. “There is always a trade-off between financial market development and macroeconomic dynamics. The committee should look at ways to balance the two,” said a financial market expert. 

The panel will also look at emerging policy and operational issues affecting financial markets, including implementation of RBI measures and identification of unintended market frictions. 

“RBI may take some steps on liquidity but it may have implications of other markets. Understanding those dynamics are also important,” said another market participant. One of the term of reference is to address issues relating to trading, clearing, settlement, reporting and other market infrastructure, including the associated regulatory and operational frameworks.

The committee will also discuss international and domestic developments, financial innovations, and emerging risks that may affect Indian financial markets.

One of the unintended market friction in recent times was the concessional swap facility for FCNR (B) deposits aimed at boosting foreign exchange reserves but the unintended consequence was the sharp increase in liquidity.