'One episode of financial instability can take us many years behind'

Oneaspect of the monetary policy that stood outwas the removal of limits on bank credit to specified large companies. Should we now infer that banks are expected to resume playing a larger role in funding them?

- 

Malhotra:

My understandingis that the 2016 policy was more about mitigating risk and limiting the exposure of banks to large companies. For the banking system, I would like to state that the large exposure framework that was there continues. This limit was progressively reduced from €25,000 crore to %15,000. crore and then to 10,000 crore, starting from 2016 to 2019. That has been done away with because it is felt that the framework for large exposure is able to take care of the needs of individual banks.

You have been seeing that the share of companies in banking exposure has come down over the years. I think in the past 10 years it has reduced by about 10 per cent. So, the risks are not so many. So, that is the primary reason why we have proposed to remove this large exposure framework for specific borrowers.

We need to continue looking at rationalising our regulations so that the productive needs of the economy are met, with the least compliance burden and at the least cost, while at the same time ensuring that wherever prudential measures are required, they are not compromised.

Are we to see these 22 guidelines or indications of guidelines that you have listed in today’s (Wednesday's) speech as a move towards easing regulations?