(b)  Countercyclical capital:  Regulators may have to contend with situations which have no precedents and where enough data and analytics are not available and yet the cost of inaction may be high. This requires taking a judgment call and respond with policy measures whose outcome may not be known with a great degree of certainty.
One such example is when RBI had to raise the capital requirements and provisioning on standard assets for banks’ exposure to certain segments (Commercial real estate, Capital markets, Housing, Non Banking Financial Companies (NBFCs) and Retail segment) during the period September 2004 to August 2008.