Monetary Policy- Not Too Keen on Competition


socio-economic position of the higher castes. Hence the periodic outburst of conflicts.
Monetary Policy Not Too Keen on Competition THE term of the Reserve Bank of India's new Governor, R N Malhotra, has begun on a piquant note. At the customary meeting with the chief executives of the major commercial banks on April 6, the Reserve Bank Governor announced the credit policy for the first half of the 1985-86 financial year, which period covers broadly the so-called slack season for the economy. The one innovative aspect of the otherwise drab announcement pertained to interest rates on bank deposits for periods between 15 days and one year. The Reserve bank decided to do away with the age-old administered .structure of interest rates on these deposits and told the banks that they could pay any rate they chose to, subject to a maximum of 8 per cent per annum. While this was not explicitly stated, it is possible that this decision was intended to be in line with the new government's proclaimed objective of encouraging competition in the economy.