the rbi had in its arsenal a variety of instruments to manage liquidity, viz., crr, slr, laf, refinance, omo and mss. through a judicious combination of all these instruments, the rbi was able to ensure more than adequate liquidity in the system. at the same time it was ensured that the growth in primary liquidity was not excessive. the inherent synergies in its multiple roles enabled the rbi to ensure orderly functioning of money, forex and government securities markets while dealing with capital flows, managing additional government market borrowing and ensuring adequate credit to restore growth momentum. as regulator and forex manager, the rbi was able to build reserves, calibrate capital controls and take prudential countercyclical measures which could be reversed when the need arose. both, macro prudential and micro prudential policies adopted by the rbi have ensured financial stability and resilience of the banking system the timely prudential measures instituted during the high growth period especially in regard to securitisation, additional risk weights and provisioning for specific sectors, measures to curb dependence on borrowed funds, and leveraging by systemically important nbfcs have stood us in good stead. the reserve requirements – both cash and liquidity – acted as natural buffers preventing excessive leverage. while credit expansion by private sector and foreign banks was significantly lower during 2008 - 09 especially to retail and sme borrowers, public sector banks ( covering nearly 70 per cent of banking assets ) maintained their credit growth to employment impacting sectors such as sme, agriculture, real estate and infrastructure, even as regulatory policies have ensured that prudential norms and financial soundness were not compromised. finally, the close coordination and interaction between the government and the rbi ensured that appropriate package of measures were put in place promptly to deal with the crisis and restore the growth momentum. thank you.

and proper ” assessment of the investor include the source of funds for the acquisition and, where the investor is a body corporate, its track record of reputation for operating in a manner that is consistent with the standards of good corporate governance, financial strength and integrity. the process also envisages a higher level of due diligence when the share holding of the investor exceeds 10 per cent in the investee bank ’ s paid up capital, which includes fit and proper status of the investor entity. an amendment to the banking regulation act has been proposed which envisages prior approval of the reserve bank for acquisition of more than five per cent of the paid up share capital of a bank by any investor “ directly or indirectly, by himself or acting in concert with any person ”. the approval will be accorded after ensuring that the investor would be “ fit and proper ” from the perspective of public interest, interest of banking policy, emerging trends in banking and international best practices, and the interest of banking and financial system in india. in the case of investments in financial market infrastructure companies, such as stock exchanges, the guidelines stipulate a desirable dispersal of ownership. investment by individual entities, including investments by persons acting in concert, is subject to a threshold of five per cent of the equity in these companies. in regard to securitisation and reconstruction companies ( src ), the rbi conducts due diligence on the sponsors / investors before giving a certificate of registration to the src. any subsequent investment by any individual entity in excess of 10 per cent of the paid up equity capital of the src also acquires the status of a “ sponsor ” and requires prior permission of rbi which, as the regulator, is required to satisfy itself, among other things, of the “ fit and proper ” credentials of the investor. foreign investment in an indian company in the financial services sector, through acquisitions, requires prior permission of the reserve bank which allows such investments only after ensuring that the regulatory concerns, if any, are appropriately addressed and that the bonafides of the overseas investor are satisfactory. wherever necessary, the clearance or comments of the home country regulators of the investing entity are also sought while examining the requests. in case of investments by foreign investors in activities other than the financial services sector, where there are security or other administrative concerns, for instance, in defence and strategic industries, and print media and broadcasting sectors, investments are allowed only under the “ approval route ”. in order to assess the eligibility