The above aspect was first taken on board in the Monetary Policy announcement in October 2005 and since then, various measures have been announced. In order to ensure that asset quality is maintained in the light of high credit growth, the general provisioning requirement on standard advances in certain specific sensitive sectors have been increased as also the risk weights.
For instance the risk weight on personal loans (including credit card receivables) is 125% and the general provision is 2 percent. Similarly the general provisions for real estate loans is 2 percent and the risk weight 150 percent. The objective is to build cushions or buffers in upswings without taking a view on the future evolution of asset quality in these asset classes.