In the circumstances, the thrust of the various policy initiatives by the Reserve Bank has been on providing ample rupee liquidity, ensuring comfortable dollar liquidity and maintaining a market environment conducive for the continued flow of credit to productive sectors. 7.
What saved the day for the Indian financial system was our policy approach of gradual and calibrated integration of the domestic financial system with overseas markets, especially the debt markets – through capital controls – as also well-modulated regulatory policies to contain bank exposure to sensitive sectors, which are more prone to asset bubbles, such as real estate and capital markets.