The RBI closely monitors it, and when warranted makes purchases and sales of foreign currency to ensure orderly conditions in forex markets. We undertook, early in the reform period, financial sector reforms - especially banking reform, which included strengthening the regulatory framework, imposing prudential norms and reducing non-performing assets. We discourage banks’ investments in real estate and stock markets.
Corporates’ exposure to debt, especially external debt, is within reasonable limits. As compared with other central banks, there is widely recognised transparency in operations of the Reserve Bank of India. There is, therefore, reason to believe that it is not just chance but sound macroeconomic management which saved us from the South-East Asian contagion.