The Reserve Bank of India Volume 5 covers the eleven-year period of 1997–2008. This is an institutional history of the RBI and thus records developments in policies and operations in its major functional areas. The time period covered in this volume is unique as it was flanked by two major crises in the international economy. The RBI not only responded to the underlying developments and challenges but also took upon itself the remarkable role of the leader in initiating reform measures in several critical areas. These included rationalising and strengthening of monetary policy operating instruments, namely institution of the Liquidity Adjustment Facility (LAF) and the Market Stabilisation Scheme (MSS), establishment of financial market institutions (for example, Clearing Corporation of India Ltd.) and building up of payment system infrastructure (for example, Real Time Gross Settlement System, Delivery versus Payment, Negotiated Dealing System, Electronic Clearing Service, and so on), putting in place firm and sound legal structure for providing flexibility yet ensuring clear outcome and accountability (for example, Foreign Exchange Management Act, 1999, Government Securities Act, 2006, Payment and Settlement Systems Act, 2007, and so on), consolidating and strengthening the banking and non-banking sectors, improving the rural credit system and the financial inclusion. Thus, one may say that much of the plumbing was done during this period on which the present-day modern system stands. In the process, however, this volume documents the evolution of the RBI itself.

Another distinguishing feature of this period was that it was characterised by a stable relationship between the government and the RBI though some differences surfaced during the latter part in such policy areas as monetary management, exchange rate and reserve management, and the quality of capital flows without having any bearing on the macro-economic stability.

The journey of preparation of this Volume 5 had been a fascinating one. It was prepared by a team of consultants under the guidance of the author Professor Tirthankar Roy of London School of Economics. The focus had been on capturing the core areas of public policy interface of the RBI with the functions of other non-core service departments kept to the minimum.