Under the proposed system, RBI chief Raghuram Rajan will not hold veto power over monetary policy decisions.

The government has circulated a draft note that proposes clipping the exclusive powers of the Reserve Bank of India governor in setting monetary policy. It proposes that a seven-member committee should draft monetary policy instead.NDTV has accessed the draft note, which suggests that the committee have four members from the government and three from the central bank, with the RBI governor, as its chair, holding no veto power as was earlier suggested, but a casting vote.The note suggests that apart from the RBI governor, the central bank can nominate two members - one deputy RBI governor and an officer - and one non-voting member from the government.The decision of the monetary policy committee will be binding on the RBI and decisions will be taken based on a majority vote. In case of a tie, the RBI governor will have the casting vote, the note says.The monetary policy committee will fix the benchmark interest rate of the RBI and set inflation targets.Under the current system, the RBI governor has a technical advisory committee to advise on monetary policy, but can accept or reject the panel's views.There was controversy over an earlier proposal by the government that it would appoint a majority of the members on the panel. It had also suggested doing away with the RBI governor's veto power.RBI chief Raghuram Rajan had said that he favoured doing away with the veto power of the central bank chief, arguing it would be better for a committee to decide the key rate rather than one individual.Finance Minister Arun Jaitley had said that the government and RBI "are on the same page" over the formation of the monetary policy committee, adding that the proposals were in line with many other countries.The new draft note proposes that the monetary policy committee will publish a medium-term inflation expectation document every six months with an inflation target for 6 to 18 months.The committee will publish all its meetings resolutions immediately and the minutes and voting pattern of the committee.