Three, the relatively underdeveloped state of financial markets partly due to legal and institutional constraints, which blunts  BIS Review 27/2002  9  the effectiveness of instruments of monetary policy. These issues need to be resolved to enhance genuine autonomy. Third, at the operational and procedural level, there is a problem of “old habits die hard”.
In a deregulated environment, there is considerable scope to reduce micro-management issues in the relations between the Government and the RBI. At the level of degree of transparency, there is a temptation to continue, what has been termed as the “joint-family approach”; which ignores basic tenets of accounting principles in regard to transactions between RBI and Government.