Indian banks safe from subprime crisis: Parekh

The Indian banking system is unlikely to be affected by the sub-prime lending crisis in the US, but banks may face problems on account of rising domestic property prices, home loan leader HDFC's chairman Deepak Parekh said today.

Reserve Bank and the National Housing Bank have taken measures to insulate the banking system from such a housing crisis, he told reporters here.

He said lending rates were unlikely to fall in the next six months, although RBI, in its quarterly review of the annual monetary policy last month, sought to halt the rate hike spree in the face of low inflation.

Inflation was down to 4.05% for the week ended August 4.

Parekh said the crisis in the US subprime market, which has been witness to banks extending loans to people with poor credit history, is unlikely to put pressure on Indian banking system.

He, however, added that the subprime crisis will have positive impact on rupee appreciation.

Not just banks, the subprime crisis is also unlikely to affect Indian companies, Chanda Kochhar, deputy managing director, ICICI Bank had said yesterday.

"No deal has fallen through from India because of the sub-prime crisis," she had said.