The statement by the Reserve Bank of India late Monday came after the country's Finance Minister Palaniappan Chidambaram told business leaders the central bank will take steps on floating the rupee in the next few days.

"Given the changes that have taken place over the last two decades ... there is merit in moving towards fuller capital account convertibility within a transparent framework," the bank said in a statement posted on its website.

"There is, thus, a need to revisit the subject and come out with a roadmap towards fuller Capital Account Convertibility based on current realities."

The six-member committee will submit a framework by end-July after exploring the implications of a rupee float on monetary and exchange rate management, the financial markets and the financial system.

The rupee, which currently trades at almost 45 to the dollar, is now convertible on the current account which allows companies and individuals to buy foreign currencies for offshore goods and services.

However, it is not fully convertible on the capital account, which includes fund and investment flows that are now restricted.

India had earlier abandoned a move towards a fully floating rupee after the Asian financial crisis in 1996-97.

Citing foreign currency reserves of more than 144 billion dollars, Chidambaram said allowing the currency to trade freely whould enable easier repatriation of earnings and so boost foreign investment.

Analysts say the move would make it easier for foreign funds to invest here which would help India bridge chronic budget deficits and lead to lower inflation as competition increased.

India's economy is expected to grow 8.1 percent in the year ending March 31, up from 7.5 percent the previous year, with foreign direct investment (FDI) put at around 7.0 billion dollars.

In 2005, India notched a record 10.7 billion dollars in foreign portfolio investment, mainly in its stock market, and has chalked up 3.4 billion dollars in new investments since the start of 2006.

India's exports are, however, hindered because the country needs a massive infusion of FDI to build ports, roads, power plants and other infrastructure.