New Delhi: In a statement clearly aimed at soothing the nerves of the market as well as the general public, RBI governor Duvvuri Subbarao assured that the fundamentals of the Indian economy are still strong. Subbarao also said that the Indian banking system is sound, well capitalized and well regulated.
The statement sought to allay fears that some Indian banks may be in trouble due to their exposure to the subprime mortgages. “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,” said the statement.
The statement also said that the uncertainty in the Indian markets is just an indirect, knock-on effect of the global financial situation.