India, as one of the fastest-growing economies in the world, has witnessed significant transformation in its banking sector in recent period. From being saddled with high non-performing assets, poor capital adequacy level, and significant losses, the Indian banking sector today reflects strength, stability, and resilience, thanks to the joint efforts of the Government, RBI, and the banks themselves. 12.
Second, with stickier prices, a change in the nominal policy rate of a given size will have a stronger impact on the real rate, which is all that matters when it comes to measuring the stance of policy. In these conditions, a more moderate policy path is not a cause of instability.