India to ensure financial sector stability: Montek

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New Delhi, October 13: : The key issue for India now is to ensure efficient functioning of the financial system and stability of the banking sector, and steps already taken have had a good effect, a top policy adviser said on Monday.

"Indian banks are sound, their balance sheets are sound, their exposure to problem assets is almost negligible and they are extremely well capitalised," Montek Singh Ahluwalia, deputy chairman of India's Planning Commission, which charts five-year growth plans, said.

"And that is true of both public sector banks and private sector banks."

India's finance minister moved to reassure markets on Monday the government was trying to shield the economy from the global financial crisis, saying policy makers were working on more measures to improve liquidity.

Ahluwalia, who is considered close to Prime Minister Manmohan Singh, said stability in the financial sector was vital.

"In my view the most important thing for us at the moment is to ensure efficient functioning of the financial markets and stability of the banking system," he said.

He said the economy was inherently in a strong position and while the global financial crisis would impact growth, India should still grow 7.5 per cent in the fiscal year to end-March.