b) Greater National Discretion: Although, we are conscious of the need for a universal regulatory framework for eliminating arbitrage, it is essential that greater national discretion is allowed to supervisory authorities.
Aided by a good macro economic environment, banks’ bottom line has improved significantly over the last two years. However, let us not forget that a major contributor to the windfall gains has been treasury profits fuelled by a secular decline in interest rates during the three years period from 2001 to 2004 and consequent profit booking on sale of government securities.