Washington: The Indian economy and banking system are sound, the Reserve Bank of India (RBI) chief assured the world financial community on Friday, as a global credit crunch intensified and world stock markets tumbled.
"What we are witnessing today in the Indian markets is an indirect, knock-on effect of the global financial situation," RBI Governor D Subbarao told a news conference.
"We are monitoring the situation on a continuous basis and stand ready to take appropriate effective and swift action."
He also said the country’s foreign exchange and money markets were functioning in an orderly fashion, and the rupee's value should be determined by supply and demand factors in the market. Subbarao said Western economies had consulted India on the economic crisis, but he welcomed additional information from them "so we are in the loop."
Asked what specific actions he would like to see from a meeting of Group of Seven industrial economies later on Friday, Subbarao said: "I think it will be useful if advanced countries let us know, and let the world know, what their sense is of the extent and depth of the crisis, and give us details of how the ... rescue packages will be implemented."
In a statement released in Delhi, Subbarao said India’s banking system was strong and had enough capital. “The fundamentals of the Indian economy have been strong and continue to be strong,” he said.
“The Indian banking system is sound, well capitalised and well regulated. Our foreign exchange and money markets have been functioning in an orderly manner. I want to reiterate that our banking system is stable and sound. There is no reason for any anxiety or uncertainty.”
“As per information with RBI, Indian banks do not have any direct exposure to sub-prime mortgages. The banking sector, through its overseas branches, has some exposure to distressed financial instruments and troubled financial institutions.
“But this exposure is part of the normal course of their business and is quite small relative to the size of their overall business. What we are witnessing today in the Indian markets is an indirect, knock-on effect of the global financial situation,” he said.
“The RBI has taken action to inject liquidity into the system as warranted by the situation. We are monitoring the situation on a continuous basis, and stand ready to take appropriate effective and swift action.”
Comments
0 comment