It may, however, be wrong to term it as a non-event, merely because it has chosen not to tinker with the CRR, bank rate or repo rate. There is a strong link with the earlier policy and the measures that have been rung in during the six-month interim, in as much as the focus remains on policy issues which concern not just us in the country, but policy-makers all over the world. These issues may be articulated as the health of the economy, stability in the currency markets and a strengthening of the banking system. Specifically to India, the issue of inflation also finds mention. The governor has voiced his concern over the burgeoning fiscal deficit and indicated that this should be a priority item on the government's agenda. Against the backgroundof similar sentiments voiced by the finance minister recently, we can safely vouch for a concerted attack on deficit in the coming months. It will not be surprising if consensus builds up on capping the government's borrowing programme. But the course, the ills plaguing the economy need all-round prescriptions. A stable rupee has clearly been the RBI's prime concern over the last 6 months and will continue to occupy centre-stage in future also. The successful RIB mobilisation and a comfortable reserves position notwithstanding, an encertain external environment will no doubt contribute to currency volatility, and as such the RBI has warned of its readiness to use all ammunition at its command, be it reserves or be if the use of a tight money policy. As the weaknesses in banking system precipitate crises the world over, in India, banks straining under the excesses of decades of social banking and problems relating to domestic recession, are in urgent need of revamp. The governor seeks to tackle high NPAlevels by a higher capital-adequacy requirement of 9 per cent by 31 March 2000. This, in all likelihood, will be enhanced to 10 per cent later as per the Narasimhan Committee recommendations. An assignment of 2.5 per cent risk weight to gilts by March 31, 2000, to be hiked to 5 per cent later, is again in line with the Narasimhan Committee norms for guarding against price risk. But in my view, this could have been restricted to securities above SLR holdings. However, the 100 per cent risk weight prescribed for open forex positions, 5 per cent earlier, could have been raised to 10 per cent. This would have been more than adequate to cover fluctuations in forex market.

The only two measures directly addressing the money market are quite welcome. One of these restores permission to money-market participants to transact repos for one day which had earlier been raised to three days. The permission to direct call-money lenders/borrowers to transact interest-rate swaps will help deep and widen the term-moneymarket, since exposure limits were a major constraint for operation in the term market. Interest-rate swaps will enable market players to trade term money with minimum exposure risk.

The last one year has seen major upheavals in international financial markets with countries regarded as "tigers" ebbing brough to their knees. If India has remained inured to such problems and the currency and financial markets have remained reasonably stable, a large measure of the credit should go to the governor.

The governor has over the last six months successfully distanced the credit policy from micro issues and made it a forum for addressing policy issues and structure matters. This will indeed help RBI focus more on the macro issues which dog the economy and closely watch the markets for any micro-level deficiencies which may be corrected as and when they occur. This undoubtedly, is a major achievement.

The author is MD of IndusInd Bank.