Mumbai: Prime minister Manmohan Singh today sought to allay fears of the financial storm that has shaken confidence in the system and precipitated a steep decline in stock markets, saying India is only experiencing the ripple effects of the financial crisis stemming from the US mortgage market crisis.

While the sharp slowdown in economic activity in the aftermath of the financial market crisis showed the prospect of a prolonged recession in industrialised countries, India, like other developing countries, is experiencing the ripple effects of the financial crisis, the prime minister said.

India, however, has taken a number of steps to minimise the impact of the global financial market crisis that many observers describe as the worst since the Great Depression of 1930s, he said.

Making a suo motu statement in the Lok Sabha, the prime minister assured the public that their deposits with domestic banks are entirely safe. He said the Indian banking system is not directly exposed to the sub-prime mortgage assets.

''Their exposure to other problem assets is also minimal. Our banks, both in the public sector and in the private sector, are financially sound, well capitalised and well regulated. There should be no fear of a failure of any bank. In particular, I wish to assure depositors in our banks that their deposits are entirely safe,'' the prime minister added.

He said the liquidity position in the financial system has improved considerably as a result of a number of steps taken to address the problems in India. Among other measures, he said, the government has arranged to provide, in advance, a sum of Rs25,000 crore to banks under the Debt Waiver and Debt Relief Scheme. The limit of investment by foreign institutional investors in corporate bonds was increased from $3 billion to $6 billion.

''Banks must also provide adequate funds in the form of investment or credit to mutual funds and NBFCs who, in turn, lend to industry, trade and business'', he added.

The prime minister, however, said the country must brace for slower economic growth because of the global market turmoil.

''We must be prepared for a temporary slowdown in the Indian economy,'' Singh said, adding that the global market turmoil would have an indirect impact on the economy.

''The precise impact is difficult to estimate at this point since the depth and duration of the global slowdown remains uncertain,'' he said.

Stating that the country's banking system is safe and there was no need to worry about a failure or collapse, he told the Lok Sabha that the Reserve Bank and the government were monitoring the situation and would ensure that additional liquidity infused into the system translated into actual credit and would take more steps if needed.

He said some estimates projected GDP growth to decelerate to 7.5 per cent in the current fiscal year to March, with the most pessimistic estimate at 7 per cent - lower than government projections of 8 per cent versus 9 per cent rise in 2007-08.