Banks produce intermediation services through the collection of deposits and other liabilities and their application in interest-earning assets, such as loans, securities and other investments. This approach includes both operating and interest expenses as inputs, whereas loans and other major assets count as outputs. In principle, there are three variant of intermediation approach, viz., the asset approach, the user cost approach and valueadded approach.
Replacing the Foreign Exchange Regulation Act and designing a process of capital account convertibility are two of the announcements in the budget which are very dear subjects to me, but I will not comment on them. A Working Group and a Committee in the RBI are working on them and I cannot pre-empt their conclusions.