After Reserve Bank of India (RBI) assured that the Indian banking system is in sound health, rating agency Crisil said it is relatively insulated from the factors leading to the turmoil in the global banking industry.
The report said that the tight liquidity crunch in the market is different from the global liquidity crunch as the latter is caused by crisis of confidence in banks lending to each other.
Indian banks stand at par with its global counterparts because of its strong capitalisation, the report said. The positive feature in the credit risk profile of Indian banks is the tier-1 capital adequacy ratio (CAR) which is above 8 per cent.
Crisil said the problems faced by global banks arose mainly due to exposure to sub-prime lending and in complex CDOs.
