No danger of Indian banks collapsing: Montek Singh

Montek Singh Ahluwalia, Deputy Chairman of the Planning Commission, said Indian banks are not under danger of financial collapse like the one that the rest of the world has seen.

Here is a verbatim transcript of the exclusive interview with Montek Singh Ahluwalia on CNBC-TV18.

Q: The Prime Minister has already said that India can’t expect to be insulated by the financial crisis effecting America and Europe but how vulnerable is the country?
A: Let’s make a distinction between the financial crisis and what happens to the economy as far as the financial sector in India is concerned. A lot of studies done by the finance ministry and the RBI show that the Indian Financial system is not burdened with any of the toxic assets which have created a problem in the world financial system and that maybe because we have been very open. So from that point of view, Indian Financial system is sounder than people think.

Q: You are suggesting that the lack of openness or the slowness of opening the financial system is actually a measure of security for us today?
A: It has proved to insulate us from the worst effects of what has happened in the rest of the world. Had we been more open but prudential then we would have still been secure but as it happens, we are less open and therefore we didn’t have such an integration of our balance sheets with the kind of assets that have created problems. So, this has been an advantage.

Source: Moneycontrol