Abstract

US Sub-prime crises was the latest financial debacle to hit the global economy. In this era of globalization it would not be untrue to say that every country was directly or indirectly affected by this global crisis. Current paper discusses the role played by RBI at the time when central bank’s role as a regulator was prime importance. Specifically this paper has analysed the guidelines issued by the RBI during 2007 sub-prime crises which had severe after effects on the strongest of economies of the world

Reserve Bank, the central bank of India has a prime responsibility of governing business and economy in India. It has to play a role which regulates and also gives out new growth opportunities to new businesses. These two require a very good balance in the restrictions and prospects posed by RBI on the corporate sector. All this is generally done through the banks which in turn are controlled by the RBI – the apex body which creates the monetary policy of Indian republic. RBI gives out policies to commercial banks and other financial institutions about the kind of financial products they can create in terms of risk and returns that they offer to the investors.

This paper is written after a detailed study of RBI guidelines on working of commercial banks in light of the global recession which witnessed fall of big economies like US, Europe and institutions like Lehman Brothers, Bear Sterns which were once regarded as immortals. 

Key words: RBI, Setback Analysis, Financial Products