Except savings deposit, all other interest rate restrictions have been done away with and banks have been given full operational flexibility in determining their deposit and lending rates barring some restrictions on export credit and small borrowings.
The commercial lending rates for prime borrowers of banks has fallen from a high of about 16.5 per cent in March 1991 to around 10.0 per cent by December 2001. In terms of monetary policy signals, while the Bank Rate was dormant and seldom used in 1991, it has been made operationally effective from 1997 and continues to remain the principal signaling instrument.