'RBI has collected info on bank exposure in Satyam'
The Reserve Bank of India has collected data on banks' exposure in scam-tainted IT firm Satyam Computer and an investigation in the matter is on, a top RBI official said.business Updated: Jan 25, 2009 12:09 IST
The Reserve Bank of India has collected data on banks' exposure in scam-tainted IT firm Satyam Computer and an investigation in the matter is on, a top RBI official said.
"We have collected data on direct and indirect exposure of banks to Satyam. The investigation in the matter is on," RBI Deputy Governor Shyamala Gopinath told reporters in Mumbai on the sidelines a conference organised by the Indira Gandhi Institute of Development Research on Money and Finance.
The Reserve Bank of India (RBI) had asked banks to furnish information to the central bank on their fund and non-fund based exposures to Satyam and associate companies.
A communique to this effect had been sent to banks recently, Gopinath said.
Replying to a question on banks not cutting their interest rates on the ground that their cost of funds are still high, Gopinath said, "It is up to (the) banks to decide how to go about it. Banks are responding by cutting PLR and deposit rates."
The Indian financial markets are facing excessive pressure due to the substitution effect, subsequent to the drying up of alternative credit avenues during the current financial turmoil.
"The slowdown in the real sector is affecting the financial sector, which, in fact, has second order impact on the real sector," Gopinath said.
During a boom time, any asset is liquid and marketable, while when the market breaks down, the asset becomes illiquid, she said.
"There is a need to have government bonds in a portfolio of liquid assets," Gopinath said.