Against the backdrop of ample liquidity in the system more recently, as banks have reduced their deposit rates, the effective lending rates would have shown further moderation (Chart 2).
Chart 2 Transmission of Policy Rate to Lending Rate  4  BIS Review 43/2010  Policy formulation processes The process of monetary policy in India had traditionally been largely internal with only the end product of actions being made public. The process has overtime become more consultative, participative and articulate with external orientation.