The underpinning logic is that resolution plans are ultimately commercial decisions of the lending institutions, and the regulator should only specify the boundaries of the game through overarching steady-state frameworks. The regulatory flexibility cannot and must not be used to solve the structural issues affecting a particular sector and as such regulatory dispensations can at best only provide a temporary relief.
Overall, every regulatory forbearance has its trade-off in terms of adverse incentives and unintended consequences. Outcomes 14. As a result of the co-ordinated efforts of the Reserve Bank and Government, in 2021-22, the year on year (YOY) growth in SCBs’ credit gathered steam.