India’s status with regard to capital account liberalisation could be seen in terms of its policy stance towards capital transactions by residents and non-residents on the one hand and by the underlying instruments of cross border flows on the other. Non-residents have been provided considerable extent of convertibility whereas permission to residents to undertake capital account transactions across borders is relatively restrained.
In that event, bankers were seen to make the kinds of basic mistakes that have been oft repeated at other times and in other places. For example, loans were made to government-supported enterprises, either at the behest of the government itself or under the assumption that official support would be provided if the loans turned bad.