Indian banks have an exposure of $336 million (Rs1,580 crore) in bankrupt US-based investment bank Lehman Brothers as on 30 September finance minister P Chidambaram told the Lok Sabha in a written reply.

Chidambaram added that the banks have made aggregate provision of $47.3 million or about Rs220 crore on these exposures. The bank exposure mainly consisted of investments in forex exposures, floating rate notes and bank guarantees.

RBI deputy governor Rakesh Mohan said at the IMF Financial Stability Forum earlier this month that out of 77 reporting banks, 14 reported exposures to Lehman Brothers and related entities in India or abroad.

In the aftermath of the turmoil caused by bankruptcy and the other financial institutions in the US and Europe representing investment banking, insurance and commercial banking segment, RBI made an assessment and arrived at the above figures, he added.

Chidambaram added that the government had ascertained that none of the Indian and foreign banks with operations in India had any direct exposure to sub-prime mortgage market in the US and other markets and "no direct impact could be seen".

He, however, added that a few of these banks did suffer some losses on account of the mark-to-market losses in their overseas operations and some of the Indian banks with overseas operations, though without direct exposure to the US sub-prime markets, had invested in certain collateralised debt obligation (CDO), of which some underlying entities had sub-prime exposure.

The overseas exposure of 12 Indian banks having overseas operation towards credit derivatives comprised mainly credit default swaps, CDO and credit-linked notes, he said.

Earlier, a finance ministry had revealed that Indian banks had a combined MTM loss of about Rs410 crore due to their investment in instruments of troubled US financial giants such as Lehman Brothers and AIG.

According to an earlier data compiled by RBI for the period upto 31st July, the MTM loss for public sector banks was estimated at $90 million, while for private banks it was around $360.

ICICI Bank accounted for three-fourths of the losses while some state-owned banks too had exposure in the instruments of these troubled US financial institutions, the official had said.

ICICI Bank alone is expected to lose approximately $80 million (Rs375 crore), invested in Lehman's bonds through the bank's UK subsidiary, as part of its treasury operations the bank had undertaken transactions with Lehman Brothers entities as counter-parties. (See: Lehman's fall to cost ICICI Bank approximately $80 million)

Earlier this month financial daily Business Standard had reported that foreign branches and subsidiary companies of Indian banks have a collective exposure of around $1 billion in the five troubled foreign financial giants – US banks Wachovia and Washington Mutual (WaMu), the largest US insurer American International Group (AIG), Belgium's Fortis and US investment bank Lehman Brothers (See: Total exposure of Indian banks to overseas financial firms is $1 billion)