The Indian Banks' Association (IBA) today said there was no systemic danger to the country's banking system on account of exposure to currency derivatives, which has already hit market leaders SBI and ICICI Bank."I don't think the banking system as a whole will feel any heat. The whole issue has been blown out of proportion," IBA's Chief Executive H N Sinor told PTI here today.Yesterday, State Bank of India (SBI), the country's largest, said that its clients could face losses of around Rs 600-700 crore on account of derivative transactions.Last month, Union Minister of State for Finance P K Bansal informed Rajya Sabha that ICICI Bank's overseas operations incurred a loss of $264.34 million (at market prices) as on January 31, 2008 due to exposure to credit derivatives.According to the IBA official, very few banks had such exposures. "Around 5-6 banks, of which 3-4 are public sector banks, would have had such deals and hence there won't be any material impact on the banking system," he said.The International Monetary Fund, in its Global Financial Stability Report earlier this month, had said that risks to India's financial sector appears manageable."In India, some corporations have borrowed dollars and swapped the resulting debt into yen, increasing the difference between borrowing and lending rates, but leaving a large open exposure. Nevertheless, the risk to the Indian financial sector arising from these transactions currently appears manageable," it said.Sinor, however, said that banks are presently in the midst of declaring financial results and the "position would be clear in the next 15-days."
