MUMBAI // India's central bank, concerned about the financial crisis in overseas markets, has asked commercial banks to provide data on their exposure to "troubled financial entities". The central bank had asked banks to furnish details of their exposure to Wachovia, Fortis, American International Group, Washington Mutual and Lehman Brothers, the Mint and Economic Times newspapers reported.
"We have sent letters to the chief executive officers of all banks seeking information on their exposure to the troubled financial entities," a senior Reserve Bank of India official said, according to Mint. The newspaper said the central bank was also planning a special audit of ICICI Bank, the country's largest private-sector lender, to assess whether it had any exposure to those entities, and the possible impact on its profit-and-loss account.
On Tuesday, the central bank joined ICICI Bank to reassure investors and customers about the financial health of India's second-biggest bank, saying ICICI was well capitalised and had enough cash to meet depositor demand. Separately, the Economic Times reported that some large foreign institutional investors (FIIs) told the Securities and Exchange Board of India (SEBI), the country's stock market regulator, that they had not been aggressively short-selling ICICI's stock.
At a meeting convened by CB Bhave, the SEBI chairman, some of the FIIs said they had been buying ICICI's stock, the Economic Times quoted a person familiar with the development as saying. ICICI Bank's shares ended up 3.1 per cent at 551.45 Indian rupees (Dh43.30) on Wednesday after hitting its lowest level in more than two years on Tuesday. The markets were shut yesterday for a local holiday. On Tuesday, the Indian prime minister Manmohan Singh, who is on a two-day visit to France, said the financial crisis in the US could hit the country, suggesting its capacity to finance development would be affected and exports compromised if major economies went into recession.
Mr Singh said the crisis affecting developed countries could spread to the rest of the world, and he wanted India and China to help find a solution. "Our value markets are opened to the world and, if they are affected, this will affect our capacity to finance our development," he told the French newspaper Le Figaro. * With Reuters