Indian banks not hit by meltdown: State Bank chief

November 26th, 2008 - 3:03 pm ICT by IANS  

Antwerp, Nov 26 (IANS) The global financial meltdown has not affected the Indian banking sector and the country’s economy will continue to grow — at the most pessimistic forecast at 7 percent-plus, the head of India’s largest commercial bank, State Bank of India (SBI), has told a Brussels-based news portal.”The Indian financial system, including both public and private sector banks and foreign banks operating in India, is one of the soundest banking systems in the world today,” Om Prakash Bhatt, SBI chairman told EuAsiaNews in an exclusive interview.

“It is largely untainted by the crisis which has overtaken the financial world and therefore there is no question of any of these banks getting any help for their capital. None of them have lost capital the way (it happened) here in the West,” he said.

Bhatt, however, noted that the global financial turmoil has had a secondary effect on the Indian economy.

Indian economy has been growing in the last four-five years at 9 percent-plus, with part of the growth fuel provided by foreign investors, who began pulling their money out of India once the meltdown started, because it was more required back home, he said.

“This pull-back has been very sudden and very swift and tens of billions of dollars have been withdrawn from the Indian stock market,” Bhatt told EuAsiaNews.

This, he said, led to a liquidity crunch. Alongside, a volatile stock market made it difficult for companies to raise capital, forcing the central Reserve Bank of India to take several measures to restore liquidity.

“Today, I am glad to say that the Indian market, particularly the banking market, is actually surplus in liquidity. So liquidity is no longer an issue,” stressed Bhatt.

Bhatt was in Belgium to take part in a dinner reception to mark the 25th year of SBI operations Monday night in Antwerp, the centre of diamond trade.

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