A major contributing factor to this has been the reduction in excessive government deficits which was prompted in Europe, not least by compliance with the fiscal criteria for entry into the planned monetary union. In terms of gross domestic product, the budget deficits in the European Union fell from 6% to slightly below 2%3 in the period between 1993 and 1998.
In October 2010, the Central Board of the Reserve Bank discussed the policy impasse arising out of this situation and decided to constitute a sub-committee under the chairmanship of one of the Board members, Shri Y.H. Malegam, to study the issues and concerns in the MFI sector.