This is, in fact, one of the big lessons of the recent crisis. A post-crisis policy dilemma for central banks, and one that is dominating both academic and policy debates at the international level, is this: should financial stability be in the domain of monetary policy or should it be pursued as an objective of regulatory policy?
In India though, we have never been doctrinaire about this. We have traditionally used regulatory tools such as risk weights and provisioning norms governing bank loans to aid monetary policy objectives.