To counteract excessive investment in sovereign bonds, we need to change the capital rules for these bonds to make sure they are adequately risk-weighted; and we need limits for banks’ exposures to sovereigns, as is already the case for private creditors. Only then will banks be able to cope with the repercussions of sovereign default.
As early as in December 2007, banks in India were sensitized to the various international initiatives including the Equator principles and were asked to keep abreast of the developments in the field of sustainable development and corporate social responsibility and dovetail / modify their lending strategies / plans in the light of such developments. 17.