Dubai crisis not to impact domestic banks: RBI

The Reserve Bank of India (RBI) today said the domestic banks do not have much exposure to the debt-ridden Dubai World and hence their balance sheets will not be materially affected from the crisis.
n the larger context, the rating agency Moody's also said the ratings of Asian banks are not likely to be downgraded, unless there is a massive restructuring in Dubai.
RBI Deputy Governor Usha Thorat said that the crisis will not impact the country's banking sector as the exposure "is not significant and not a matter of concern...It is not something that materially affects their balance sheets".
Moody's also said Asian banks have relatively small exposure to Dubai and Dubai World companies. "Therefore, no rating actions have been taken on Asian banks as a result of the requested standstill on select Dubai World debt payments. Nor does Moody's expects that there will be any need of negative rating action on Asian banks at a later date...."
So far as the domestic banks are concerned, Bank of Baroda has an exposure of Rs 5,000 crore in Dubai. State Bank of India too had provided Rs 1,500 crore to some UAE companies.
Moody's said, "The Asian banks have billions of dollars of exposures to the UAE entities, but this represents small per cent of their assets. To date, we have found no Asian banks to have sufficiently high levels of exposure to members of Dubai World group to warrant any ratings actions

PRAVESH YADAV
PGDM (2009-11)
1st sem