The most widely used instruments have been measures to limit credit supply to specific sectors that are seen as prone to excessive credit growth. These included limits calibrated to borrower risk characteristics (caps on LTV ratios or debt/income ratios) as well aggregate or sectoral credit growth ceilings and limits on exposures by instruments.
Many emerging economies, given their specific context already had placed measures to address specific risks – loan-to-deposit limits, core funding ratios, reserve requirements for liquidity risk and limits on open currency positions or on derivatives transactions for forex risk. 23. In the Indian context, I can say that this perspective was writ large on most of the elements of the prudential framework.