We, in India, also adopted a similar approach through a calibrated increase in the risk weights and provisioning requirements during the period of rapid credit growth. However, the important difference was that our approach entailed sector-specific prescriptions.
The objective was not so much to lean against the wind of rising asset prices but as a cautionary measure to contain the exposure of the banking sector to sensitive asset classes where rapid credit expansion was observed. It is commonly agreed now that the monetary authorities can’t avoid creation of bubbles by targeting asset prices.