The financial world should work together and the regulators should take meaningful initiatives to address the global crisis the world is currently in, said Dr KC Chakrabarty, Deputy Governor of India's central bank, Reserve Bank of India (RBI), yesterday.
"The crisis was the result of regulatory deficiencies and the solution lies in the regulatory initiatives," said Chakrabarty while addressing the bankers attending a seminar organised by Bankers' Forum.
To a question whether India would seek to establish Islamic banking, Chakrabarty said there was no need to establish a specific interest-free regime as it already exists in different forms. "I don't think India needs to formally establish an Islamic banking system," he said.
Chakrabarty called on regulators to work together to face the gaps in the system so that an effective regulatory framework can be established. He stated the current recession gained greater attention because of the fact that its epicenter was in the United States, which controls about 40 per cent of the world's GDP. "However, I believe this will not repeat in our lifetime," he added.
Chakrabarty said the crisis that gripped the Russian banking system or the one affected the Latin American economy failed to make any big noise compared with the current one. Moreover, earlier crises were bailed out by the financial system, but in this crisis the financial system itself had come under attack, he said.
Chakrabarty told that four to five Indian banks are owed a combined $275-$300 million (Dh1 billion-Dh1.1bn) by Dubai World as it restructures its $22bn of debt.
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