New Delhi: Amid apprehensions of banks taking a hit from the global meltdown, Prime Minister Manmohan Singh on Monday assured the Lok Sabha that deposits in public sector undertakings and private sector banks are “entirely safe” and promised that inflation will come down in the next two months.
On a day the Reserve Bank of India reduced the short-term lending rates by 1%, the Prime Minister said the government “will not hesitate to do more, if needed,” to infuse more liquidity into the banking system.
Making a suo moto statement on the ongoing global financial crisis and its impact on India, Singh, however, struck a note of caution saying there will be an “indirect impact” on the economy and “we must be prepared for a temporary slowdown”.
He said Indian banks, both in the public and private sector, are financially sound, well capitalised and well regulated.
“There should be no fear of a failure of any bank,” he said adding, “I wish to assure depositors in our banks that their deposits are entirely safe”.
While inflation has shown a clear deceleration, the Prime Minister said he expects a “further reduction” in the wholesale price index in the next two months.
He said some estimates projected GDP growth to go down to 7.5% in the current year. “Our effort will be to minimise the negative effect of the financial crisis... to return to the growth trajectory of 9%,” he said.