The Indian banking system is stable and sound, safe from the fallout of the ongoing global financial turmoil, the Indian Express quoted Duvvuri Subbarao, Governor of India's central bank the Reserve Bank of India as saying Sunday.
Subbarao ruled out any direct impact of the global crisis on the Indian financial system and termed the developments in the market as an "indirect, knock-on effect of the global financial situation".
The RBI Governor said deposits in Indian banks are safe and there are no reasons for anxiety or uncertainty.
"Our forex and money markets have been functioning in an orderly manner," he told a news conference in Washington Friday.
Indian banks are not directly exposed to sub-prime mortgages, he added. 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," Subbarao said.
"RBI has taken action to inject liquidity into the system. We are monitoring the situation on a continuous basis, and stand ready to take appropriate, effective and swift action," he said.
Subbarao also said that managing inflation while maintaining growth momentum and financial stability were the immediate short-term priorities of the Indian central bank.
Source: Xinhua
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