"So far neither globally nor in India have we felt that this bubble could lead to a very major problem. However, as financial market regulators both RBI and Sebi need to be cognisant of the risk going forward," he said.
Addressing the media after a customary post-Budget address by Finance Minister Arun Jaitley to the RBI's board, Patel said the correction in the last few days underscores that market indices can move pretty quickly.
"I think the good thing in this cycle of high equity prices is that almost everyone who has been part of this has talked about a possibility that this cannot go on too long.
"I think that is good so that there is enough risk aversion that is endogenous, built up by the investors themselves," he said.
Stock markets have been on a sharp downslide this week, barring just one session, amid a global rout in equities.
The benchmark indices fell by over 1 per cent yesterday to close at a one-month low level. While the Sensex had managed to gain 330 points on Thursday, it had lost more than 2,200 points in the preceding seven trading sessions amid negative domestic and global cues.
In reply to a question, Jaitley said the issue of long- term capital gains, which he has proposed to re-introduce in this year's Budget, was discussed earlier today in his meeting with Sebi's board. However, this issue was not part of his meeting with the RBI board.
On other issues discussed with RBI, Jaitley said, "The MSP issue was discussed in this meeting because this meeting takes place in the light of Budget. How to implement this and what impact it can have on farmers, commodity prices and export competitiveness, all these issues were discussed academically."
On the banks' lending rates, Patel said one of the banks reduced its MCLR (Marginal Cost of funds-based Lending Rate) two days ago.
"In terms of transmission if you measure since the easing cycle started by the MPC (Monetary Policy Committee) and you compare the MCLR now, actually there has been good transmission.
"Actually what happened was that transmission came late and I must admit that some of the transmission came after demonetisation because we had a financial intermediation taking place in the system," the governor said.