Abstract
The Indian banks have suffered from Rs.400 billion rupees loss because they have invested with many American
financial institutions. Some Indian banks had invested 410 billion rupees in American securities. In it ICICI bank had invested 234 billion. Though Indian Banking service is related with the public sector still there were 21 percent deductions in use of manpower. The Gov t. has been providing finance under pressure; the subsidiary capital is to be created because of subsidy of farmer’s debt, petrol and fertilizers. American Federal Bank has increased her interest rate when the inflation going on.It was 1 percent before few years but in last 18, months it jumped to 5 percent. It resulted in the breakdown of real estate value and the people stopped to deposit their loan’s installments. Previously the home loans were given more than 100 percent to their basic price. Hence, the banks could get back their loans interest by even selling the mortgaged assets. Then the bank who had given home loans came down the step of bankruptcy. The Global Financial System is in a deep and unprecedented crisis. Central Banks and Governments the world over were facing several complex and compelling
challenges. There have been severe disruptions in money markets. Policy makers across the globe were responding with aggressive, radical and unconventional measures to restore the confidence and impart stability in the system.India has by-and-large been spared of global financial contagion due to the sub-prime turmoil for a variety of reasons. India’s growth process has been largely domestic demand driven and its reliance on foreign savings has remained around 1.5 percent in recent period. It also has a very comfortable level of forex reserves. The credit derivatives market was in an embryonic stage.The originate-to-distribute model in Indiais not comparable to the ones prevailing in advanced markets.There were restrictions on investments by residents in such products issued aboard and regulatory guidelines on securitization did not permit immediate profit recognition. Financial stability in India has been achieved through perseverance of prudential policies which prevent institutions from excessive risk taking, and financial markets from becoming extremely volatile and turbulent.
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