In the Reserve Bank’s view, in certain cases, the statutory auditors have underestimated the extent of NPAs and the required provisioning. Since RBI, as the supervisor of the banking system, relies and leverages on the work done by auditors, the profession should effectively address this issue.
And with the same persistence, monetary policy reacts more to a shortfall in demand than an increase in competition. If the impact of increased competition on the rate of inflation is less persistent, as we expect, this conclusion is only reinforced. That’s the theory. What about the practical world of monetary policy?