An important lesson from 2006 onwards is that nothing should be off the table. When we went in for market stabilisation bonds, it was on the basis of the recognition that conventional instruments were not adequate. In September–October 2004 and since December 2006, we reverted to the use of CRR (Cash Reserve Ratio) as an instrument of liquidity management.
It is quite reasonable to believe that the decline in deposit rates ushered by the deregulation process will be manifested in the lending behaviour of banks. In practice, however, lending rates have tended to be sticky downwards and seem to operate with a time lag. Historically the NIM of Indian banks is rather high.