Banks were advised on October 31, 2008 to consider restructuring of the dues of MSEs wherever warranted, and continue to disburse loans against the sanctioned limits. Special refinance limits for assisting the MSE sector were introduced and SIDBI was provided a limit of Rs 7000 crore.
As a result, brokers, analysts and investment bankers abused the standard. The upward movement of stock prices immediately inflated balance sheets which, in turn, further inflated the asset price and, when the economic downturn set in, the bubble eventually burst.