Mumbai, Sept 17 : While Indian bankers do not see much impact from the exposure to Lehman brothers, market analysts do not rule out immediate repercussions of the fallout on the Indian stocks.
It is official now that the sub prime crisis is no longer confined to either the US market or just the mortgage market, but the reverberations are being felt world over and across all financial services.
A failed investment banking firm- Lehman brothers is for sure spelling troubles for the Indian companies that have invested in the company.
Japan, Australia and India pumped 33 billion dollar into money markets on Wednesday as a U.S. government rescue of insurer AIG failed to soothe frayed nerves and ease a funding squeeze triggered by the crisis engulfing Wall Street.
Across Asia, which has been largely shielded from the worst of the credit crisis, central banks were bracing for more market turmoil.
Experts said that with the collapse of a giant investment banker like Lehman brothers, the impact is felt all around.
"The problem is really severe, Lehman brothers, even Tata AIG after that also had big problems, first it demanded 20 billion dollar, then it demanded 40 billion dollar, then 80 billion dollar from the Federal Reserve Bank (US Fed), so what we can come to a conclusion is that the problem in US is grave, somehow I don't know why but it could not be foreseen by the best of the people sitting there. And how much it would take from here is very difficult to say because the figures are not known, the quantum is not known, the exposure is not known completely, but it will definitely have a very bad impact. In the US, it is happening, it will slow the economy and obviously will have effect on other markets as well," said Ankit Ajmera, market analyst.
Lending between banks nearly seized up this week after the global credit crisis pushed Lehman brothers to seek bankruptcy protection, Merrill Lynch into the arms of Bank of America and insurer American International Group Inc to the brink of collapse -- all during one tumultuous weekend.
The Federal Reserve, which supplied an 85 billion dollar bridge loan to rescue AIG, disappointed investors who had bet that it would follow its injection of emergency funds with an interest rate cut.
Neither investors nor policymakers showed much signs of confidence that markets would return to normal any time soon.
Asian stocks and the dollar initially rallied on news that the global financial system would be spared the collapse of AIG- the insurance giant that operates in 130 countries.
But shares gave up their early gains and cash remained tight in money markets with no end in sight to the 13-month old credit crisis.
Capital has been fleeing emerging markets as investors stung by the upheaval on Wall Street shun risky assets. Seoul has spent more than 30 billion dollar this year to support the won, which has tumbled 17 per cent in 2008 against the dollar.
The Reserve Bank of India (RBI) has sprung regularly to the rupee's defense, buying it in the currency market and exacerbating a shortage of local currency.
After the rupee's biggest one-day fall in a decade on Tuesday, the RBI said it would make it easier for banks to get cash. On Wednesday, it injected 47.36 billion rupees into the banking system at the first of its tenders.