michael debabrata patra : one year in the life of india's monetary policy committee speech by dr michael debabrata patra, executive director of the reserve bank of india, at the jaipur regional office of the reserve bank of india, jaipur, 27 october 2017. * * * the theme of this lecture was inspired by an interview given by governor dr. urjit r. patel in the mint, october 9, 2017 available at www. livemint. com / industry / gr9h0mnqal5ko4pdga7fdl / rbigovernor - urjit - patel - weve - started - seeing - the - upturn - in. html. i am grateful to dr. viral v. acharya for valuable comments. inputs from shri sitikantha pattanaik, dr. praggya das, dr. rajiv ranjan, dr. rajeev jain and dr. jai chander are also acknowledged with appreciation. at 2. 30 pm on october 4, 2017 the resolution of the monetary policy committee ( mpc ) was released on the website of the reserve bank of india ( rbi ) and history was made in a small way. exactly a year ago, a page was turned on a tradition that went back to the origins of the rbi in pre - independent india. the monetary policy decision, hitherto made solely by the governor of the rbi, was ceded to a six - member committee comprising the governor as the chairperson, the deputy governor in charge of monetary policy, one officer of the rbi appointed by its central board, and three external members appointed by the central government. the room filled with debate and argumentation, challenge and counter - challenge, articulations of well - defended individualistic assessments, and voting – india ’ s monetary policy was undergoing a regime change. quietly ushered in, without any grandeur about it or anything like that, it was a big step towards the modernisation of the conduct of monetary policy in india. invested by legislative mandate – through an amendment to the rbi act – with the goal of ‘ maintaining price stability keeping in mind the objective of growth ', india joined a select but growing band of countries that, beginning in 1990, adopted flexible inflation targeting ( fit ) as their framework for monetary policy. under fit, price stability is accorded primacy as an objective of monetary policy, while being mindful of the state of the economy. accordingly,

in today ’ s world of banking. retail banking in india retail banking in india is not a new phenomenon. it has always been prevalent in india in various forms. for the last few years it has become synonymous with mainstream banking for many banks. the typical products offered in the indian retail banking segment are housing loans, consumption loans for purchase of durables, auto loans, credit cards and educational loans. the loans are marketed under attractive brand names to differentiate the products offered by different banks. as the report on trend and progress of india, 2003 - 04 has shown that the loan values of these retail lending typically range between rs. 20, 000 to rs. 100 lakh. the loans are generally for duration of five to seven years with housing loans granted for a longer duration of 15 years. credit card is another rapidly growing sub - segment of this product group. in recent past retail lending has turned out to be a key profit driver for banks with retail portfolio constituting 21. 5 per cent of total outstanding advances as on march 2004. the overall impairment of the retail loan portfolio worked out much less then the gross npa ratio for the entire loan portfolio. divanna, joseph a. ( 2004 ) : the future of retail banking, new york : palgrave macmillan. within the retail segment, the housing loans had the least gross asset impairment. in fact, retailing make ample business sense in the banking sector. while new generation private sector banks have been able to create a niche in this regard, the public sector banks have not lagged behind. leveraging their vast branch network and outreach, public sector banks have aggressively forayed to garner a larger slice of the retail pie. by international standards, however, there is still much scope for retail banking in india. after all, retail loans constitute less than seven per cent of gdp in india vis - a - vis about 35 per cent for other asian economies - south korea ( 55 per cent ), taiwan ( 52 per cent ), malaysia ( 33 per cent ) and thailand ( 18 per cent ). as retail banking in india is still growing from modest base, there is a likelihood that the growth numbers seem to get somewhat exaggerated. one, thus, has to exercise caution is interpreting the growth of retail banking in india. drivers of retail business in india what has contributed to this retail growth? let me briefly highlight some of the basic reasons. first, economic prosperity and the consequent increase in purchasing power has given a fillip to a