Also it may be borne in mind that the revised rules have been made applicable to only systemically important NBFCs, that too as per the new definition and for deposit accepting NBFCs in line with the Bank’s mandate of financial stability and depositor protection. Besides, ample time of 3 years has been given for compliance, which is likely to cushion impact on profitability.
They simply suggested a range of economic conditions under which we would not act. They conveyed nothing about our actions in other states of the economy. In my view, this was one of the major drawbacks to the approach and the reason changes were needed. Over the past 20 years, the Taylor rule has garnered a great deal of attention and study.