Government has appointed three academics as members of a new monetary policy committee that will set interest rates, in a landmark change to how central bank decisions are made in the country, according to a finance ministry statement on Thursday.

As per the summary of electronic consultation with the Technical Advisory Committee (TAC) released by RBI on Tuesday, three of the five external members recommended no change in policy rates.

RBI Governor Raghuram Rajan went the majority view of the external advisory body on monetary policy to slash the key interest rate early this month, according to the minutes of the meeting released on Thursday.

The RBI had held consultation with external members of the Technical Advisory Committee (TAC) between Nov 20 and 24, 2015 in the run up to the fifth bi-monthly policy review.

\"We have advised mutual funds that instead of relying completely on credit rating agencies, they must have their own system of risk assessment,\" Sebi Chairman UK Sinha said.

\"The government has prepared a Cabinet note on MPC. RBI is a very credible institution and nothing will be done in MPC composition that undermines the role of RBI,\" a senior Finance Ministry official said.

As per analysts, a hike in interest rates which have been at near-zero levels since last decade by US Federal Reserve will send shock waves across the world's capital markets.

Four out of seven members of the committee suggested a cut in the repo rate in view of subdued inflation and need to boost growth.

\"Monetary Policy Committee (MPC) and Public Debt Management Agency (PDMA) are two sides of same coins. There is consensus (with the RBI). I am hoping it (amendments) can come to Parliament in Winter session in December,\" said Finance Secretary Rajiv Mehrishi.

At a hurriedly called press conference, Finance Secretary Rajiv Mehrishi went into a detailed explanation as to whose draft proposal it was to withdraw the RBI Governor's veto power.

M Govinda Rao, a member of Financial Sector Legislative Reforms Commission said its a misconception that the revised draft of IFC is a report of FSLRC while adding that RBI Governor should indeed have a \"veto power\" in the monetary policy.

The revised draft of Indian Financial Code, released by the ministry last week, is based on recommendations of FSLRC, headed by Justice B.N. Srikrishna.

FSLRC has made its recommendations, which have been made public for comments. After the comments are received, it is only then that the government will take a view, he told reporters in New Delhi.

The revised draft of Indian Financial Code (IFC), released by the finance ministry, proposed taking away the RBI Governor's authority to veto the interest rate decision of the Central bank's monetary policy committee.

The revised draft of Indian Financial Code (IFC), released by the Finance Ministry, has also proposed that the all-powerful committee would have four representatives of the government and only three from the central bank, including the 'RBI Chairperson'.

Four members recommended reduction in the policy repo rate, RBI said while releasing summary of Technical Advisory Committee on Monetary Policy.

Behind the dense fog of political and bureaucratic obfuscation is a start-up working to create the tech backbone for GST. The challenge is to meet the April 2016 deadline.

\"A couple of days, and the governor had decided. We had not been told that's what he would like to do,\" said a senior policymaker.

The RBI, under the celebrated economist Raghuram Rajan, is waiting for the consumer price index, or retail inflation, to ease below its targeted levels.

Here is a quick look at Narendra Modi's cabinet.