In order to contain the risks arising out of non-SLR investment portfolio of banks and FIs, in particular through the private placement route, it was proposed by the RBI to issue further prudential guidelines to be observed by banks. The draft guidelines were circulated to the banks and FIs in October 2001.
The final issue I would like to mention is the transmission of monetary policy through the lending channel. A tightening of credit standards by banks might amplify the impulse from monetary policy normalisation. One interesting way to look at this issue is to consider the heterogeneity of banks in terms of (say) market power, screening processes, balance‑sheet strength, and possibly other factors.