Indeed, one of the main reasons India came out of the crisis relatively unscathed is that the Reserve Bank “leaned against the wind” and took preemptive action to restrict the flow of credit to certain sectors such as real estate which showed signs of risk build-up. The Reserve Bank reviews its monetary policy stance every quarter through a scheduled policy review.
This involves determining the relative prioritization between the three objectives of monetary policy – growth, price stability and financial stability – and on that basis, to determine whether and how our policy variables should be changed. Notwithstanding scheduled quarterly and mid-quarterly reviews, we reserve the right to alter our policy stance at any time to respond to the evolving macroeconomic situation.