Question: How is India approaching the financial crisis?
Cyril Shroff: India has not really had, a sort of severe impact for the financial crisis. The impact had been somewhat muted because of prudent financial management as well as some basic structure factor which have insulated it from the global financial crisis. And I could recite specific reasons for that, for some of them include the fact that our economy had been primarily domestic focus of the dependents on rest for demand as well as for capital has also been somewhat limited. Secondly, our financial system has always pursued the policy of more prudent management. Our banks are well-capitalized. We have not had exposure to toxic assets and these are some of the factors that have contributed to insulating us somewhat from global conditions.
Question: Is India similar to an E.U. country in its approach?
Cyril Shroff: If I would compare with European country I think it’s still much, much better off. Our financial institutions, not even one of them is broke. Even in the beginning, of this sub-prime crisis the only impact was the fact that there was actually increase liquidity into India as a result of Fed rate cuts in the US. So the regulatory response was really to try and sterilize the extra liquidity that was coming in. As far as the second major milestone event in the financial crisis, the Lehman bankruptcy even that didn’t have much of an impact because their little counterparty risk which Indian banks had to Lehman or events which flew out of that. So we’ve had a muted impact. That being said, the global conditions have had some impact as much as capital flows have been reduced and have been more subdued, our capital markets have, our stock markets have fallen quite significantly since the peak. They are reviving in more recent weeks but they had at one point of time come down quite sharply.
Recorded on: April 29. 2009