11 Oct ; Assuring depositors that their money was safe in Indian banks, Reserve Bank of India Governor D Subbarao on Saturday said that there was no cause for anxiety and pointed out that Indian banks do not have any direct exposure to sub-prime mortgages.
Although Subbarao added that the banking sector, through its overseas branches, has some international exposure but it is quite small relative to the size of their overall business.He said that the central bank was geared to inject more liquidity into the country’s financial system.
US President George W. Bush and finance ministers from the Group of Seven rich countries opened crisis talks on Saturday, looking for unity on a remedy to the global financial crisis.
After the White House meeting, Bush was scheduled to make public remarks flanked by the ministers of Britain, Canada, France, Germany, Italy, Japan and the heads of the IMF and the World Bank.
US Secretary of State Condoleezza Rice and Treasury Secretary Henry Paulson sat on either side of the US President, who was surrounded by other top aides including national security adviser Stephen Hadley.
The early morning meeting at the White House came after the Group of Seven finance chiefs agreed on Friday to use "all available tools" to support major banks and prevent their failure as they sought to dampen a financial firestorm threatening more mayhem.
The plan followed another day of massive falls on the markets as investors rushed to the exits, putting G7 officials under intense pressure to come up with a convincing accord.
Analysts said, however, there was a lack of substance and nothing that would calm the markets and so allow a more measured approach to the problems thrown up rather than the crisis mode of the past few weeks.
"The G7 agrees today that the current situation calls for urgent and exceptional action," a statement released by the US Treasury said."We commit to continue working together to stabilise financial markets and restore the flow of credit, to support global economic growth."
Developing countries worried about growth prospect
Developing countries have warned that the deepening global financial crisis could dampen their growth prospects and recommended a comprehensive international response to prevent "the most difficult situation in years" from deteriorating further.
The Group of 24 poorer countries noted that some advanced economies are slowing markedly and some already are in recession. They suggested a possible spillover effect that could hit their economies.
It is essential, they said, to "address deep-rooted weaknesses in risk management and financial sectors in advanced countries that led to excessive risk-taking and speculation".
The G-24 met on Friday before the weekend meetings of the International Monetary Fund and the World Bank. The group includes countries from Latin America, Asia and Africa. It groups such regional economic powers as Brazil, India and South Africa. China attends the semiannual meetings as an observer.
"We need to avoid having a domino effect," said G-24 chairman Jean-Claude Masangu Mulongo, governor of Congo’s central bank. "We need a coordinated effort to address the crisis and not have countries just deal with their own crisis but to look at the effect of their actions on their neighbours".
The G-24 communique noted several times the crisis originated in advanced countries, which for years have been telling them how to manage their economies, to open their borders to trade and to promote private-sector development.
In the advanced countries, the communique said, the ministers "underscored the need for fundamental reform of the regulatory and supervisory framework as well as clearer accounting rules and transparency". DDINEWS