The committee was also of the view that non-bank entities like Unit Trust of India (UTI), Life Insurance Corporation (LIC) and others should be taken out of the call money market. The inter-bank call and notice money market should be strictly restricted to banks with the only exception of primary dealers.

Elaborating on the need for a clearly defined prudential limit for banks, the committee argued, "This would reduce the problem of vulnerability of chronic borrower banks." Access to the call market should be essentially for meeting the unforeseen swings and not as a regular means of financing banks' lending operations.

It has also suggested that the interest rate movements in the inter-bank call money market should be orderly and the same could be achieved with RBI presence in the market through repos in as short a period as asingle day through primary markets.

The RBI support to the market should be through a Liquidity Adjustment Facility under which the RBI would periodically, reset its repo and reverse Repo rates which would in a sense provide a reasonable corridor for market play.

It further adds that while there is merit in an inter-bank reference rate like LIBOR such a rate would emerge as banks implement sound liquidity management and the other suggestions are implemented. Such a rate has to earn its position in the market by being fairly stable which signals small discrete interest rate changes to the rest of the system.