MKT `MAY'HEM: ENOUGH FUNDS IN SYSTEM - RBI

Reserve Bank of India (RBI) stepped in today to give an assurance that the financial system was robust enought to absorb the impact of the slide in the equity market.

"In light of the developments in the stock exchanges, the RBI has been in
touch with major settlement banks and both the major stock exchanges to
ensure that the payment obligations on the exchanges are met smoothly," the central bank said in a statement soon after the shares went into a downward spiral.

A senior RBI official said: "Our (RBI's) statement on availability of liquidity assistance to banks was more to assure that the system is geared to deal with such circumstances." RBI had asked banks to get in touch with RBI if they needed liquidity support in the wake of the stock market crash.

The official said no bank approached the RBI for liquidity support to meet
the requirements relating to margins of capital market players. There is
adequate liquidity in the system, including with banks, and it is substantiated by the huge mop-up for funds (about Rs 60,000 crore) through the liquidity adjustment facility in the last few days and the substantial foreign exchange resources.

The country's foreign exchange reserves at the end of the first fortnight of
May 2006 were about $163 billion.