New Delhi, Monday, October 20, 2008: Prime Minister Manmohan Singh on Monday assured depositors about the health of the Indian banking system, saying there should be no fear of failure of any bank.

Speaking in Lok Sabha, Dr Singh said that Indian banks are well capitalised, both in the public and private sector, to meet the needs of the depositors as well as credit-seekers.

Indian banks are not directly exposed to the US sub-prime crisis, which has triggered a financial meltdown and poses the risk of a global recession, the PM told the House.

He further said that India was suffering from the ripple effects of the global credit crisis, and asked everyone to prepare for a “temporary slowdown” in the Indian economy. The PM however added that he could not say how long this slowdown would last.

Commenting on the liquidity crunch in the Indian markets, Dr Singh said that the Reserve Bank’s measures to cut CRR and SLR cuts have considerably improved the availability of cash in the financial system.

While acknowledging it was not enough to improve liquidity to tackle the current crisis, the PM said that his government would ensure there is no disruption of the economic activity.

“We will not hesitate to do more,” Dr Singh said in an assuring tone.

On the issue of price rise, the PM said his government was expecting inflation to come down in the next two months.

Commenting on the GDP figures, the PM said that the Indian economy was expected to grow by at least 7.5% in the current fiscal. “Even if we go by the most pessimistic estimates, India’s GDP will grow by 7%,” he added.

He concluded by saying that India has faced challenges in the past and tackled them well, adding that the country will manage to overcome the current crisis as well.

In the times of crisis, Indians have a habit of rising to the occasion, a confident PM said.

(Agency)