Fifth, the general provisioning requirement on standard advances in specific sectors, i.e., personal loans, loans and advances qualifying as capital market exposures, residential housing loans beyond Rs.20 lakh and commercial real estate loans was increased from 0.40 per cent to one per cent in April 2006 and further to two per cent on January 31, 2007.
Reserve management The BIS paper notes that large foreign exchange reserves expose central bank balance sheets to significant losses mainly from two sources: losses on holding of reserves due to exchange rate appreciation and carrying costs – the difference between the interest rate cost of funding the reserves and the return on foreign assets is the carrying cost of reserves.