Mumbai: Reserve Bank governor  D Subbarao has assured depositors that the central bank was geared to inject more liquidity into the country's financial system and there was no cause for anxiety.

''Our banking system is stable and sound. There is no reason for any anxiety or uncertainty,'' he said while talking to reporters.

RBI has already pumped over Rs60,000 crore into the system throw a 1.5 percentage reduction in the cash reserve ratio for banks and the governor said it is ready to inject more liquidity as and when a need arises.

''We are monitoring the situation on a continuous basis and stand ready to take appropriate, effective and swift action," he said.

"Indian banks do not have any direct exposure to sub-prime mortgages. The banking sector, through its overseas branches, has some limited exposure to distressed financial instruments and troubled financial institutions,'' he said.

"But this exposure is part of the normal course of their business and is quite small relative to the size of their overall business," Subbarao explained.

''What we are witnessing is an indirect knock-on effect of the global financial situation. This is only a reflection of the uncertainty and anxiety in the global financial markets," he pointed out.

Meanwhile, the inter-bank rates are expected to return to single digits next week with the the easing of CRR to 7.5 per cent and the deferring of a Rs10,000 crore government borrowing programme.

Call rates had mover up to 15-16 per cent on Friday, but the 10-year bond appreciated sharply. The yield on the 10-year bond was 7.8 per cent at close of trading, down from the previous closing yield of 7.98 per cent.

The CRR cut will release Rs 60,000 crore of bank deposits that were frozen with the central bank till now. Another Rs 3,500 crore will come into the banking system, following the redemption of bonds issued under market stabilisation scheme.

There is however, some uncertainty over RBI's intervention in the forex market. RBI's market intervention to shore up the rupee is sucking out rupee liquidity worth nearly Rs5,000 crore for every $1 billion sold.

RBI sold a net $6.3 billion in the spot market, and another $1.8 billion in the forward market in July. The figures for October could be even higher.