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India cbank says state banks in robust condition

Posted by Yogesh on Monday, 6 October, 2008

PUNE, India, Oct 6 (Reuters) – India’s central bank said on Monday that the country’s state-run banks were robust enough to deal with the global credit crisis and private sector banks also had adequate risk management systems.

Reserve Bank of India Deputy Governor V.Leeladhar said the central bank had been improving the risk management techniques of Indian banks over the past decade, and they could now easily face the challenges posed by the current difficult environment.

“Based on whatever information which is available to us, the banks, the public sector banks, I think are in a robust condition to deal with the financial crisis,” he told reporters.

“The risk management systems of private sector banks are comparatively OK,” he said.

Leeladhar indicated that private sector banks with overseas exposure could be affected to some extent.

“And of course when you have a presence overseas you run the risk of getting some exposure. But otherwise there would be no business done by the overseas branches of our banks,” he said.

On ICICI Bank, Leeladhar said “Nothing has changed since our last statement.”

Last week, the central bank said India’s second-largest bank was well capitalised, following media reports that customers were withdrawing cash from ICICI because of rumours regarding its financial strength.

The global credit crunch has caused a spate of bank collapses, mergers and nationalisations in the United States and Europe in recent weeks on concerns about exposure of financial entities to toxic debt, rising bad loans and slowing growth. Source Reuters

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