As on March 31, 2008, the PSBs accounted for 69.9 per cent of the aggregate assets and 72.7 per cent of the aggregate advances of the Scheduled commercial banking system. A unique feature of the reform of the public sector banks was the process of their financial restructuring. The banks were recapitalised by the government to meet prudential norms through recapitalisation bonds.
However, here again, the depreciation in the currency is limiting the extent of this benefit, and it is thus likely to keep headline inflation elevated. In addition to this, while core inflation surprised on the downside recently, the exchange rate-sensitive core goods continued to accelerate.