Introduction and Overview
1.1 Banks and Monetary Policy
1.2 Indian Context
1.3 Issues
1.4 Methodology
1.5 Broad Findings

Commercial Banks and Monetary Policy: Some Theoretical Considerations
2.1 Introduction
2.2 The Ability of Central Banks to Constrain Bank Lending
2.3 Extended IS-LM Models with Explicit Role for Banks
    2.3.1 Extended IS-LM Models without an Independent Role of Banks
    2.3.2 Banks in Bernanke and Blinder (1988) Model
2.4 Loan and Deposits Substitutes for Banks and Corporates
    2.4.1 Certificates of Deposit and Bank Behaviour
    2.4.2 Existence of Bank-Dependent Borrowers and Commercial Paper
2.5 Information Asymmetry and Bank Behaviour
    2.5.1 Stein (1998)’s Model
    2.5.2 Macro-Implications of Credit and Equity Rationing
2.6 Concluding Observations

Monetary Policy and Bank Behaviour in India: Some Stylised Facts
3.1 Introduction
3.2 Macroeconomic and Monetary Trends
3.3 Monetary Policy Actions
     3.3.1 Direct Measures for Controlling Banks’ Balance Sheets
     3.3.2 Development of Market-related Instruments
     3.3.3 Deregulation of Interest Rates
     3.3.4 Deregulation of Bank Operations
     3.3.5 Prudential Regulation
     3.3.6 Changing Fiscal Scenario
3.4 Commercial Bank Behaviour
     3.4.1 Aggregative Parameters
     3.4.2 Portfolio Composition of Commercial Banks
     3.4.3 Profitability Indicators
3.5 Concluding Observations

Impact of Monetary Policy on Banks’ Balance Sheet: The Macro Behaviour
4.1 Introduction
4.2 Monetary Policy and Bank Portfolio: A Select Review
     4.2.1 Methodology of Measuring the Impact
     4.2.2 Monetary VAR Models: A Review
     4.2.3 Monetary Policy and Bank Portfolios
4.3 Specification of the VAR and the Variables
     4.3.1 VAR Specification
     4.3.2 Choice of Variables and Time Span
     4.3.3 Treatment of Seasonality
4.4 Results from the Basic Model
     4.4.1 Selection of Lag Length
     4.4.2 Impulse Responses
     4.4.3 Variance Decomposition
4.5 Some Robustness Tests
     4.5.1 How Far are the above Results Sensitive to Ordering?
     4.5.2 Unrestricted Difference VAR
     4.5.3 Results with Alterative Choice of Policy Variable
     4.5.4 Results in a Five Variable VAR
     4.5.5 Results with Quarterly GDP
     4.5.6 Results with Interest Rate as an Additional Variable
4.6 Conclusion

The Impact of Monetary Policy: Does Ownership Matter?
5.1 Introduction
5.2 Heterogeneity in Impact of Monetary Policy on Banks: A Select Review of Literature
     5.2.1 Ownership and Monetary Policy Impact on Banks
     5.2.2 Indian Literature on Ownership of Banks
5.3 Some Stylised Facts
     5.3.1 Public Sector Banks
     5.3.2 Foreign Banks
     5.3.3 Private Sector Banks
     5.3.4 Old Generation Private Sector Banks
     5.3.5 New Generation Private Sector Banks
     5.3.6 Relative Shares of the Bank Groups
     5.3.7 Performance Indicators of the Bank Groups
     5.3.8 Portfolio Pattern
5.4 Impact of Monetary Shock on Different Types of Banks
     5.4.1 Methodology and Data Base
     5.4.2 Impulses from the Level VARs
     5.4.3 Variance Decomposition
5.5 How Robust are these Results?
     5.5.1 Sensitiveness of the VARs with respect to Ordering
     5.5.2 Impulses from the Difference VAR
     5.5.3 Results with Alternative Monetary Stance Variables
     5.5.4 Results for a Shorter Time Period (1996-97 through 2003-04)
     5.5.5 Results from a Five Variable VAR
5.6 Conclusion

Size, Liquidity and Capital: How do they Influence Bank Credit?
6.1 Introduction
6.2 Received Literature
     6.2.1 Size, Liquidity and Bank Credit
     6.2.2 Capital Constraint and Bank Behaviour
     6.2.3 Indian Evidence
6.3 A Description of the Panel and Some Stylised Facts
     6.3.1 A Description of the Panel
     6.3.2 Some Stylised Facts
6.4 Empirical Methodology and the Model
     6.4.1 Empirical Methodology
     6.4.2 The Model
6.5 Empirical Results
     6.5.1 Base-line Model
     6.5.2 Results from Specific Attributes of Size, Liquidity and Capitalisation
6.6 Some Robustness Tests
     6.6.1 Results with Alternative Liquidity Variable
     6.6.2 Results with Alternative Stance Variable
     6.6.3 Results with Normalised Variables
     6.6.4 Results with Interest Rates
6.7 Conclusion

Conclusion and the Way Forward
7.1 An Overview
7.2 Broad Contours
     7.2.1 Theoretical Developments
     7.2.2 Stylised Facts for India
     7.2.3 Econometric Evidence
7.3 Policy Implications and Futuristic Scenario
     7.3.1 Consolidation in Indian Banking
     7.3.2 Changes in Operating Procedure of Monetary Policy
     7.3.3 Newer Norms of Bank Capital
7.4 Scope of Further Research