The macroeconomics apart, the policy announcement dwelt quite a lot on managing public finances and systemic risks more efficiently. A number of streamlining measures to manage the finances of state governments will help them take better advantage of the Twelfth Finance Commission's push to direct access to markets. Recognising the banking system's increasing exposure to real estate, both residential and commercial, there has been some tightening of the provisioning requirements against large loans to this activity. The RBI has also initiated several measures to improve the flow of credit to rural borrowers in ways that are consistent with the rather rigorous prudential norms being put into place. Admittedly, these are mainly in the exploratory stage, but given the government's emphasis on expanding rural credit, it is incumbent on the RBI to ensure that this does not happen at the cost of the banking system. For some time now, the RBI has been pre-occupied with the macroeconomic canvas. It was time for it to take a breather and pay some attention to bread-and-butter banking issues. The window may not be open for long and should be taken full advantage of. |