Front Page

No cause for alarm: Chidambaram

NEW DELHI: Finance Minister P. Chidambaram on Thursday assured investors and the people at large that there was “no cause for any alarm” on account of the U.S. financial crisis as Indian banks were largely insulated from the consequent global turmoil.

In his maiden reaction to the collapse of U.S. investment banker Lehman Brothers and bail-out of insurer AIG (American International Group) by the U.S. Federal Reserve, Mr. Chidambaram said that the government would continue on the path of reforms to maintain the momentum in economic growth at close to eight per cent.

Interacting with journalists after a briefing on the decisions taken by the Cabinet Committee on Economic Affairs (CCEA), he said: “Let me assure everyone there is no cause for any alarm that any Indian bank is exposed or vulnerable like a couple of banks that have failed in the United States.” Mr. Chidambaram pointed out that the country’s public sector banks, in which the government holds the majority shareholding, did not have any “undue exposure” and whatever they had were in accordance with the Reserve Bank of India guidelines. ICICI Bank, however, did have some exposure and it had made the necessary disclosures.

“Both IRDA [The Insurance Regulatory and Development Authority] and RBI have assured me there is no reason for any apprehension…In fact, many of them [state-owned banks] have no exposure at all. Whatever exposure they have are in accordance with RBI’s prudential guidelines.”

As for the Tata-AIG joint venture, the Tatas, as the majority stakeholder, had assured the government that they would meet all the obligations to their policy-holders. “We have received a full report from the Tata-AIG management. IRDA has spoken to them and has got a report. I have spoken to IRDA chairman. Their [Tata-AIG] solvency margins are adequate.”

Related stories: