corporates, on their part, have shown a greater sense of responsibility in the use and repayment of the borrowed funds. a noteworthy aspect is that 4 / 6 under current guidelines relating to external commercial borrowings, indian corporates have been able to borrow significant amounts from overseas directly, based on their own credit standing. in this context, it would be useful to recall some of the important policy initiatives of the rbi relevant to bank - corporate relationship. dr. rangarajan ’ s monetary policy of april 1997 announced a package of measures permitting multiple banking arrangements for the corporates and providing greater operational freedom to the banks. dr. jalan ’ s policy pronouncements followed through this initiative with development of the money market, move towards universal banking and above all, urging the banks and corporates to put in place sound risk - management systems – particularly for market risks. in 2003, rbi issued a fair practices code to be followed by the banks which aimed at making them more responsive to the borrowers and enhancing the confidence of borrowers in the banks as a source of funds. the procedure for declaring borrowers as " wilful defaulters " has been streamlined so as to afford full opportunity to the corporates to present their viewpoint before so classifying them. recent developments that warrant a careful redesign of the bank - corporate relationship include financing by multiple banks, through several instruments including investments, and access to a wider choice of sources of finance for corporates such as capital markets and external financing. since such choices nudge towards transaction - based banker - customer relationship, these could impinge on the access to the information required by the bankers for financial assessment as also on the ability of corporates to get an assured and appropriately priced financial package. perhaps there is a need for supplementing transaction - based relationship between banks and corporates with a more active and meaningful dialogue between them. i am sure such meetings do take place even now, but it is worth exploring whether the process needs to be strengthened. in this regard, there may be an advantage in industry bodies like ficci and iba embarking upon a review of the existing practices of dialogues between the banks and their corporate borrowers to ensure and enhance trust, transparency and timeliness – the three " t " s of banking. such a review could perhaps also promote healthy competition amongst banks and add to the comfort of the corporates too. the corporate debt restructuring mechanism ( cdrm ), which became operational since march 2002, is another platform for banker -

##ed economists until john maynard keynes offered an explanation that was to influence policy practitioners for generations to come. he argued that, contrary to the tenets of smith and his followers, market systems did not always converge to full employment. they often appeared to settle at an equilibrium in which significant segments of the workforce were unable to find jobs. in the place of smith's laissez - faire approach arose the view that government action was required to restore full employment and to rectify what were seen as other deficiencies of market - driven outcomes. a tidal wave of regulation soon swept over much of the american business community. labor relations, securities markets, banking, agricultural pricing, and many other segments of the u. s. economy became subject to the oversight of government. the apparent success of the economy during world war ii, which operated at full employment in contrast to the earlier frightening developments during the depression years, led to a considerable reluctance to fully dismantle wartime regulations when the hostilities came to an end. however, cracks in the facade of government economic management appeared early in the post - world war ii years, and those cracks continued to widen as time passed. at the macro level, the system of wage and price controls imposed in the 1970s to deal with the problem of inflation proved unworkable and ineffective. and at the micro level, heavy regulation of many industries was increasingly seen as impeding efficiency and competitiveness. by the early 1980s, the long - prevalent notion that the centrally planned economy of the soviet union was catching up with the west had begun to be discredited, though it was not fully discarded until the collapse of the berlin wall in 1989 exposed the economic ruin behind the iron curtain. 1 / 6 starting in the 1970s, u. s. presidents, supported by bipartisan majorities in the congress, responded to the growing recognition of the distortions created by regulation, by deregulating large segments of the transportation, communications, energy, and financial services industries. the stated purpose of this deregulation was to enhance competition, which had come to be seen as a significant spur to productivity growth and elevated standards of living. assisting in the dismantling of economic restraints was the persistent, albeit slow, lowering of barriers to cross - border trade and finance. as a consequence, the united states, then widely seen as a once - great economic power that had lost its way, gradually moved back to the forefront of what joseph schumpeter, the renowned harvard professor,