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New Delhi, September 18
Finance minister P. Chidambaram today reassured the investors that there was no cause of alarm for India’s financial institutions and banks, as they were largely insulated from the crisis that has gripped the US financial system.

“Let me assure every one that there is no cause for any alarm, no Indian bank is exposed or vulnerable like a couple of banks that have failed in the United States,” he said after the Cabinet meeting.

In his first reaction after the collapse of Lehman Brothers and the bailout of the largest US insurer AIG, the finance minister said India's financial institutions were on a sound foundation.

“Both Reserve Bank of India and Insurance Regulatory Development Authority (IRDA) have assured me there is no reason for any apprehension,” he said.

As far as public sector banks are concerned, in which the government is a majority owner, Chidambaram said they didn't have any undue exposure.

In fact, many of them have no exposure at all. Whatever exposures they have are in accordance with RBI's prudential guidelines. ICICI Bank had some exposure, which it has disclosed.

Meanwhile, the Indian bourses shed a gloomy outlook and ended positive today with BSE Sensex gaining 52.70 points and Nifty 29.9 points following finance minister’s assurance to provide more liquidity to the market in the event of a tight cash situation.

After a bearish phase of six days, the Sensex made a 0.4 per cent gain to close at 13,315.60, while Nifty of the National Stock Exchange also saw a slender 0.75 per cent gain to end the day at 4038.15.

After yet another bearish opening today, the Sensex recovered 757.46 points and Nifty 238.6 points from day's low of 12,558.14 and 3799.55, respectively.

On the fate of Tata insurance venture with the American Insurance Group, which has been taken over by the US government, he said, the Tatas have assured insurance regulator IRDA that all Tata-AIG payment obligations would be met.

The finance minister reiterated that India’s economy would grow close to 8 per cent while the government would go ahead with financial sector reforms without fear of any negative fallout.

“The government will pursue reforms, having regard to the context, having regard to international situation and having regard to our ability to keep regulations one step ahead of innovation,” he stated.