The role that the Fed’s founders envisioned for the central bank was narrower, and more passive, than the role that the Fed plays today. The emphasis was on providing currency and reserves to meet seasonal demands and on assisting banks in accommodating the credit needs of commerce and business.
In India, while the banks make the provision for diminution in fair value of advances as a result of restructuring and sometimes take a burden of low-yielding preference shares, borrowers fulfil their obligation by bringing only 15% of the bank’s sacrifice and that too in two phases.