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Statement by Dr. Duvvuri Subbarao, Governor, Reserve Bank of India at the IMF

Washington, DC 
October 10, 2008

1. The fundamentals of the Indian economy have been strong and continue to be strong.

2. The Indian banking system is sound, well capitalised and well regulated.

3. Our forex and money markets have been functioning in an orderly manner.

4. As per information with RBI, Indian banks do not have any direct exposure to sub-prime mortgages. The banking sector, through its overseas branches, has some exposure to distressed financial instruments and troubled financial institutions. But this exposure is part of the normal course of their business and is quite small relative to the size of their overall business.

5. What we are witnessing today in the Indian markets is an indirect, knock-on effect of the global financial situation. This is only a reflection of the uncertainty and anxiety in the global financial markets.

6. The Reserve Bank of India has taken action to inject liquidity into the system as warranted by the situation. We are monitoring the situation on a continuous basis, and stand ready to take appropriate effective and swift action.

7. Once again, I want to reiterate that our banking system is stable and sound. There is no reason for any anxiety or uncertainty.