Tarapore Report-II urges for a strong macroeconomic policy, capacity building in domestic banks and consolidation of banks. The dissent notes, however, oppose the proposed ban on Participatory Notes, and any change in the present RBI policy with regard to exchange rate management, besides any dollar deposit schemes for foreign residents.

The Tarapore Committee - II has recently submitted its report, on the theme, "Towards Fuller Capital Account Convertibility". While it preferred a gradual approach for the capital account convertibility, it contains many interesting observations in the realm of finance and economics. This article attempts to dwell on such observations.

The report emphasizes the need for strong macroeconomic policy framework, and sound financial system and markets besides the presence of prudential supervisory and regulatory policies. It cautions that the linkage between growth and capital account liberalization has not been established yet through any empirical research.

While the Committee favors discontinuation of tax benefits on NRI and FCNR deposits, (in the context of comfortable external reserves position) it recommends that Non-residents, other than NRIs should be allowed to open accounts in India without tax benefits. It also argues for a hassle free investment regime for NRIs. In fact, it recommends harmonization of tax policies, following global integration of capital markets.

Professional Banker Magazine, Tarapore Report-II, Macroeconomic Policy, Domestic Banks, Exchange Rate Management, Regulatory Policies, Capital Acount Liberalization, Capital Markets, Real Effective Exchange Rate, REER, Liquidity Adjustment Facility, Foreign Institutional Investors, FIIs, Financial Globalization, International Accounting Standards, Liquidity Management.