introduction of technology. the intermediation costs of banks in india still tend to be higher than those in developed banking markets. table 1 key indicators of earning and expenses of scheduled commercial banks, in per cent year net interest margin operating costs to total assets urban + metro business / total business ( % ) deposits per account ( rs ) advances per account ( rs ) 1. 97 2. 77 68. 56 2688. 77 11818. 12 3. 37 2. 65 64. 50 6412. 48 20757. 03 2. 95 2. 68 68. 26 19898. 01 84618. 76 2. 63 1. 87 77. 63 59217. 32 258751. 28 source : statistical tables relating to banks in india, various issues. 14. yet, the question remains how far has the customer benefited from this increase in income of banks. i would like to say that very little of the benefits earned by banks in today ’ s liberalised environment have been passed on to the customers. there is enough empirical evidence to show that the cost of small transactions has not gone down. i will give only one example of low value draft issuance charges. unless low - value transactions are costeffectively done, it is not going to impact efficiency drastically. 15. as regards actual measurement of transaction costs, there are almost no studies which actually quantify in a systematic way the exact level of costs in financial transactions from a customer ’ s point of view. incidentally, i would like the iba to look into this issue and initiate studies on a regular basis for understanding the cost of transactions for small and retail customers. 16. have we been successful in using technology to make things easier or convenient for the customer? no doubt, technology has the potential to extend in a cost effective manner the penetrative reach of banking services and products to a large section of the excluded society. but let us look at some of the critical indicators for access to finance and performance and efficiency of banks in india along with benchmark indicators for selected high - income oecd member countries that are given in annex table 1. the penetration indicators reveal that there have been improvements during 200108 but is still very adverse as compared to oecd economies. 17. is it any easier to open a deposit account? can a person get a loan easily and quickly? i have numerous anecdotal evidences including the one by my domestic help who in a metropolis like mumbai,

attempting to achieve at any point of time. importantly, this approach entertained much regulatory discretion, often at the level of an individual, viz. the reserve bank governor. this made independence of monetary policy individual - specific ; in other words, it allowed for government pressure to creep in easily for keeping rates low at times of fiscal expansion under one guise or the other. this is exactly a setting where rules would be better than discretion, in particular to avoid the time - inconsistency problem, highlighted in the work of nobel laureates finn kydland and edward prescott in 1970s and early 1980s. kydland and prescott ( 1977 ) consider the implication that people, including investors, could look into the future and anticipate the behavior of self - interested governments, so that a discretionary monetary policy could end up being compromised by government pressures, leaving inflationary expectations unanchored, whereas a monetary policy committed to a rule would be harder to bend and keep inflationary expectations at bay. 6 following several episodic bouts of double - digit inflation, a war on inflation and inflationary expectations, was finally launched in september 2013 by the then governor raghuram g rajan ; the urjit patel committee report to revise and strengthen the monetary policy framework was released in 2014 ; and, finally, the reserve bank of india act was modified in august 2016 to constitute the monetary policy committee ( mpc ). the mpc consists of three rbi members, including the governor who reserves a casting vote, and three external members appointed by the government. the mpc has been legislatively awarded a flexible inflation - targeting mandate of achieving 4 % consumer price index ( cpi ) inflation in the medium term, while paying attention to growth, with operational independence to achieve it, and with accountability in terms of transparency around the mpc ’ s resolution, minutes summarising each individual committee member ’ s decision, bi - annual monetary policy reports, and a written report to the government in case a + / - 2 % band around the target inflation level is violated for three quarters in a row. see also buiter and sibert ( 2000 ), who lay out the theoretical basis for the required legal and institutional arrangements, primarily operational independence of the central bank, for an effective monetary policy. the mpc, two years old since, has attempted steadfastly through its rate - setting decisions to build credibility of the inflation target, a process that is generally believed, and empirically documented, to help lower