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Macroprudential frameworks, implementation, and relationship with other policies

In: Macroprudential policy frameworks, implementation and relationships with other policies

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  • Reserve Bank of India

    (Bank for International Settlements)

Abstract

Macroprudential tools were actively used in India long before the onset of the global financial crisis. The regulatory tools, and the power to activate them, reside with sectoral authorities, while the Financial Stability and Development Council is the apex body concerned with financial stability. Its Sub-Committee has taken on the role of finalising broad-based macroprudential policies and tools. As India is a bank-dominated economy, and the Reserve Bank of India regulates banks, non-bank financial companies and most other important segments of the financial markets, the Bank is the main centre for macroprudential analysis. This paper documents the successful implementation of various macroprudential tools such as provisioning, risk weights, loan-to-value ratios and capital flow measures. We also highlight the coordinated use of macroprudential and monetary policies in response to changes in the macro-financial environment before and after the crisis. Lastly, the analytical approaches to systemic risk assessment in India, together with the use of communication as a policy tool, are discussed.

Suggested Citation

  • Reserve Bank of India, 2017. "Macroprudential frameworks, implementation, and relationship with other policies," BIS Papers chapters, in: Bank for International Settlements (ed.), Macroprudential policy frameworks, implementation and relationships with other policies, volume 94, pages 179-187, Bank for International Settlements.
    • Handle: RePEc:bis:bisbpc:94-14
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    References listed on IDEAS

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    1. Mohan, Rakesh & Kapur, Muneesh, 2009. "Managing the Impossible Trinity: Volatile Capital Flows and Indian Monetary Policy," MPRA Paper 70632, University Library of Munich, Germany.
    2. Reddy YV, 2010. "Asia: Counter-Cyclical Policies: Indian Experience and Some General Observations," Journal of Globalization and Development, De Gruyter, vol. 1(1), pages 1-14, January.
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    Cited by:

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    2. Xuefang Liu & W. Robert J. Alexander & Sajid Anwar, 2018. "Bank Runs in China: Evidence from a Dynamic Panel Model," Arthaniti: Journal of Economic Theory and Practice, , vol. 17(1), pages 15-30, June.
    3. Chantawit Tantasith & Nasha Ananchotikul & Chatlada Chotanakarn & Vorada Limjaroenrat & Runchana Pongsaparn, 2018. "The Impact of LTV policy on Bank Lending: Evidence from Disaggregate Housing Loan Data," PIER Discussion Papers 90, Puey Ungphakorn Institute for Economic Research.
    4. Sebastian Edwards, 2021. "Macroprudential Policies and The Covid-19 Pandemic: Risks and Challenges For Emerging Markets," NBER Working Papers 29441, National Bureau of Economic Research, Inc.
    5. Péter Fáykiss & Alexandr Palicz & János Szakács & Márton Zsigó, 2018. "Experiences of Debt Cap Regulations in Hungarian Retail Lending," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 17(1), pages 34-61.
    6. Hristov, Nikolay & Hülsewig, Oliver & Kolb, Benedikt, 2021. "Macroprudential policy and the sovereign-bank nexus in the euro area," Discussion Papers 32/2021, Deutsche Bundesbank.

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