It is clear the RBI is greatly concerned about the health of the banking system, more so in an international environment where many banks are facing severe crises. It is against this backdrop that higher capital adequacy ratios, higher risk weightages and provisioning have been introduced. Continuing on the same theme, special mention has been made of the need for banks to step up risk management, operations and compliance, among other things.

This concern for the banking system is justified and the steps taken are both curative and preventive. Recent experience has exposed banks worldwide and the RBI governor has rightly taken steps to make Indian banks less vulnerable.

One of the positive measures is that wholesale players in money markets can now undertake interest rate swaps. This, in conjunction with the stronger focus on asset-liabilitymanagement, is a positive step in the development of term money markets.

It was hoped that the applicability of risk weightage on government bonds would be restricted to holdings beyond the statutory requirements since the SLR portfolio is not discretionary. This has not happened. The introduction of a uniform auction system is positive, as it will take away the "winners curse" from the primary government markets and should be extended to all maturities.

Those who expected some measures to boost stock markets and industrial growth, among other things, will be disappointed. While the RBI sees 6 per cent GDP growth in 1998-99, serious concerns about fiscal deficit, money supply and inflation have been raised. In this environment, the forecast appears to be optimistic. It is a relief to find that the RBI has not hiked the CRR or the bank rate despite clearly being tempted to do so. Both would have further slowed down an already slow economy.

In many ways, this was not really a "credit policy" but a seriesof measures for prudential management of banks. It was, of course, widely expected that the credit policy would be a non-event in that no earth-shaking policy measures were anticipated. The RBI has rightly taken the focus away from the credit policy as far as such announcements are concerned. Policy measures cannot be taken on a six-monthly basis and need to be dealt with proactively as and when required.

Vishnu Dueskar -- Managing director of ABN Amro Securities (India) Pvt Ltd