A recent RBI circular reminds us that digital banking, welcome as it is in the overall context, does not benefit all sections of society equally.
While the State Bank of India has played a pioneering role through its insurance programme, premiums have skyrocketed recently, that too, secretly.
The MPC records the fact that during demonetisation there were “fire sales” of essential items that depressed prices. The unusually sharp fall in CPI inflation in April cannot be taken for granted.
Leaving aside the historical traditions of each princely state bank, and the imminent implementation obstacles, the few advantages of this merger deserve closer scrutiny.
The MPC claims that the decision to narrow the policy corridor is consistent with a neutral stance of of monetary policy.
The RBI’s statement, the first after the Budget, carries forward the Budget’s message of fiscal discipline and consolidation.
Perhaps the biggest casualty of demonetisation has been the central bank’s loss of autonomy as it has allowed the government to ride roughshod over it.
The policy statement put out by the RBI is consistent with an accommodative stance of monetary policy and has largely unexceptional goals.
Through mergers with its associate banks, SBI will benefit from better reach and network, and will find itself among the world’s largest banks. But it also risks ignoring local sensibilities.
For both the financial markets and the public at large, the monetary policy announcements are primarily about the interest rate changes.