Indian financial system resilient: RBI

04 March 2009

Mumbai: The Indian financial system remains strong in the face of global economic crisis, Shyamala Gopinath, deputy governor of Reserve Bank of India (RBI) said in Mumbai yesterday.

''The financial system in India has been resilient in these trying times. Whatever fault points have been felt in the recent months do not owe their origin within the financial sector'', she said in her inaugural speech at the 10th annual conference of the fixed income money market and derivatives association of India (FIMMDA) and the primary dealers association of India (PDAI).

''As RBI governor Dr Subbarao has aptly remarked in one of his speeches, Indian experience has been different in the sense that the strain in the real sector got transmitted to the financial sector unlike the other countries where it was the other way round. It is only through a constant process of mutual consultation between the market participants and the RBI that we will ride the difficult period,'' she added.

Gopinath said the test for further market development would be based on an assessment of not only implications for an individual institution - micro prudential, but also implications for systemic risks.

While speaking to reporters on the sidelines of the seminar, she reiterated earlier comments from the central bank that RBI would manage the government's additional borrowing for 2008-09 prudently so that it does not disrupt financial markets.

''RBI will ensure that the government borrowing programme is conducted in a smooth manner. We will see to it that it is done non-disruptively through instruments like open market operations (OMO) and we have done that,'' Gopinath said.