The New Framework was necessitated due to the chinks exposed by the global financial crisis in the then existing regulatory framework.
It was generally recognised that the extant regulatory regime (i) did not consider the pitfalls of unrestrained financial innovations, (ii) could not handle pro-cyclicality of the financial system, (iii) paid scant attention to “too big to fail (TBTF)” syndrome, (iv) failed to restrain the rapid growth of shadow banking and (v) allowed build-up of asset prices and credit booms and busts. 4.