The monetary policy framework also envisaged moving the policy decision to a committee from a one-man show. Nevertheless, the impact of monetary policy would be limited going forward be it in India or the US, he said. Economists and market players alike have termed the new monetary policy framework as Rajan’s biggest contribution, the large-scale bank balance sheet clean-up being the second. Rajan overhauled the monetary policy framework of the RBI by bringing in a new blueprint wherein the RBI would have an inflation target specified in consultation with the government. Hansen said that the RBI’s move to make bank balance sheets more transparent is a big positive for the country.

Source: Mint July 25, 2016 18:45 UTC