The impact of the package of measures is reviewed on a regular basis, and no negative side effects have been identified so far. The important thing is to look at the financial system as a whole. If individual banks restrict their lending because capital requirements become binding, this may in fact be because the measures are having the desired effect.
On current indications, implementation of Basel II will require more capital for banks in India due to the fact that operational risk is not captured under Basel I, and the capital charge for market risk was not prescribed until recently.