They have set out a roadmap for implementation of appropriate standard and codes in the light of existing levels of compliance, the cross-country experience, and the existing legal and institutional infrastructure. The Advisory Group on Banking Supervision has assessed the Indian banking system vis-à-vis the principles of the Basel Committee on Banking Supervision.
As a result, they are keeping nearly $ trillion of reserves at the Fed in excess of what they need to back their deposits. In other words, banks have the licenses to create money, but are choosing not to do so. I’m confident, though, that at some point in the future, the economy will improve and banks will once again have good lending opportunities.