The Reserve Bank, therefore, ensured the necessary expansion in net domestic assets (NDA) through conventional open market operations (OMO) involving outright purchase of government securities in the secondary market as well as provision of liquidity through repos under its daily liquidity adjustment facility (LAF).
Many QIS4 participants reported difficulty computing LGDs (which must reflect downturn conditions), in part because their data histories were not long enough to capture weaker parts of the economic cycle. To address this problem, the agencies have proposed a supervisory mapping function that can be used in the interim by those institutions unable to estimate appropriate downturn LGDs.