This counter-cyclical prudential requirement enabled banks to absorb some of the adverse impact when interest rates began moving in the opposite direction in late 2004. Banks have been maintaining capital charge for market risk as envisaged under the Basel norms since end-March 2006. The regulatory guidelines in India require banks to classify their investments in three categories, similar to the international standards.
The measures aim at providing flexibility to banks and economic stakeholders, and safeguard the economy. To support businesses, a Special Relief Amount, a Special FX line of credit and swap arrangements for import-oriented businesses were introduced. The setting up of the Mauritius Investment Corporation was a milestone in our endeavour to protect the economy by avoiding the collapse of Covid-impacted systemic businesses.