'Few banks have subprime lending related investment'

NEW DELHI: Global rating agency Fitch on Wednesday said most Indian banks do not have exposure to subprime related investments and they are restricted to a few banks with international presence.

"A few Indian banks with international activities may have some exposures but we would not expect these to be material relative to their capital, given that Indian banks have experienced strong demand for mortgage finance in their domestic market," Fitch said in a release.

Therefore, they have not had to look overseas for investment opportunities, in contrast to financial institutions in Japan, Taiwan, Singapore and Hong Kong where weak economic conditions led them to look overseas for more attractive investment opportunities, it said.

Earlier during the day, HDFC Chairman Deepak Parekh, the crisis in the US subprime market is unlikely to put pressure on Indian banking system.

However, he said, there could be some impact on some banks because there is rise in the property prices in the country.

Fitch also noted that the exposures of most of the rated Asia-Pacific banks to US subprime-backed structured securities but direct exposures are low, generally amounting to just a few per cent of the investing bank's equity capital.

"Losses on such investments will put a dent in annual earnings but do not pose a systemic risk as they are not a serious threat to the soundness of the banks we have surveyed," said Fitch Head Financial Institutions Group in Asia-Pacific David Marshall.