Financial sector regulation in India, as it evolved over the years, has focused on prudential regulation for individual institutions while simultaneously putting in place measures to deal with systemic risk, arbitrage and capital account management. When credit to certain risk-prone sectors was found to be growing at a very high rate, countercyclical measures through additional capital and standard assets provisioning were introduced.
Going forward, the challenge for us is to calibrate financial sector development to meet the needs of a rapidly growing and globalising economy while adhering to the best practices in micro- and macro-prudential regulation for ensuring financial stability. Thank you. 14  BIS Review 25/2010