Recent research studies indicate that the threshold level of inflation in India is about five (5) per cent beyond which inflation harms growth by putting sands on the wheels of commerce. For example, given the level of disposable income, consumption of the same level of goods and services by households requires more spending and, therefore, less amount of disposable income is left for savings.
We are exploring the empirical evidence and examining whether adjustments to the leverage ratio might be appropriate in the context of our holistic capital review, as well as in the context of broader reforms being undertaken by the Federal Reserve and a range of other agencies.