, and identify questions that will guide future work. it is important that we learn from our own actions, but it is also important to get other perspectives. therefore, this review will be assessed by external experts. we expect the final report to be published early next year. while this review is a significant step, it is not the final word. questions will continue to be asked that may shape if and how we use our exceptional tools in the future. these questions are particularly valuable in a world where the next crisis may look different from those in the past. conclusion to wrap up, the pandemic was a period defined by the unknowable. uncertainty was particularly high. so, the bank took a risk management approach to decision - making. we considered alternative futures and thought about the consequences of making policy errors. governing council then chose a policy course that accounted for those risks. our research into our use of exceptional tools during the pandemic suggests those policies helped lower longer - term interest rates by increasing monetary policy stimulus even after the policy rate was brought as low as possible. the unwinding of qe through qt has gone smoothly. however, it is worth remembering that we faced an unprecedented shock when we decided to use qe. the bar for us to use qe again is very high. - 11 last week, we cut the policy rate to 4. 75 %. if inflation continues to ease — and our confidence that inflation is headed sustainably to the 2 % target continues to increase — it is reasonable to expect further cuts. but we are taking our interest rate decisions one meeting at a time. it is comforting to see inflation come down. but it is alarming that it rose as much as it did. our focus now is on the lessons we can take from our pandemic experience and how those lessons will guide the future application of monetary policy. thank you for your time. i ’ m happy to take any questions.

, banks will also be required to draw up their strategies for meeting the capital requirement arising out of implementation of basel 2. banks have been until now tapping the traditional instruments eligible for capital status, namely equity shares and subordinated debt instruments. the present legal framework does not allow all banks to raise capital through issue of preference shares. there are also certain restrictions on the maximum tenure of preference shares. this not only gives rise to an uneven playing field but also raises issues pertaining to the eligibility of redeemable preference shares for capital status, especially with regard to inclusion under tier i or tier ii. in view of the above uncertainties this has been a largely untapped source of capital in india. with a view to enabling banks to tap this source the reserve bank is examining the amendment of the existing legislation. through proper structuring, preference capital may be made attractive to meet the needs of a section of investors. we need to explore carefully this option as also the raising of capital through other hybrid instruments defined under the basel guidelines, so as to address the requirements of capital by the banking sector in india. this brings me to consolidation in the banking sector. as you are aware, the first narasimham committee had recommended consolidation in the indian banking sector whereby we would have a few internationally active banks, a few national banks and the others would remain regional banks. it was also clarified that the mergers should be based on synergies and locational and business specific complementarities of the concerned institutions and must obviously make sound commercial sense. mergers of public sector banks should emanate from the managements of banks with the government as the common shareholder playing a supportive role. in this background, the implementation of basel 2 could trigger a round of consolidation in the banking sector. it is difficult to foresee the precise pattern of consolidation which is likely to be triggered with the implementation of basel 2 in india. as we have seen in the past, in any merger integrating the manpower and culture of the taken over bank with the manpower and culture of the host bank proves to be a great challenge. it is only when integration in these aspects is achieved successfully that the merged entities would be able to capitalise on the synergies. hence, while the consolidation moves would be triggered by market forces, it will be necessary to ensure that mergers are successful in all respects, including manpower and cultural aspects, which are unique in the indian context. smaller localised banks might nonetheless still have a relevant role even on a