INSUBCONTINENT EXCLUSIVE:
make every effort to prevent the risk of "contagion" in credit markets resulting from a scare caused by two non-banking financial companies
(NBFC), a senior government advisor said on Wednesday.The finance ministry, the Reserve Bank of India (RBI) and market regulator Securities
and Exchange Board of India (Sebi) are "closely following" the credit markets and will take "appropriate actions" to avert a "market
freeze", Sanjeev Sanyal, Principal Economic Adviser to the Ministry of Finance, said in a Reuters chatroom
"This is top of mind."Investors were unnerved after one of the biggest NBFCs in the country - Infrastructure Leasing Financial Services
(ILFS) - this month defaulted on a series of its coupon payments.Fears that liquidity problems in the NBFC sector grew after a large fund
manager sold short-term bonds issued by home loan provider Dewan Housing Finance at a sharp discount."The authorities will make every
efforts to contain contagion from ILFS/NBFC issue," Mr Sanyal told the chatroom participants, who included traders and analysts.While the
benchmark 10-year bond yield fell to 8.086 from its previous close of 8.124 and the rupee marginally strengthened on the day to 72.63 per
stage as crude oil prices have surged and trade tariff tensions have led to a broad retreat from emerging markets.The benchmark 10-year bond
yield has risen nearly 11 per cent so far this year and the partially convertible rupee has weakened more than 12 per cent."On rupee, all
options are open," Mr Sanyal added
"The US dollar seems to have stabilized against the basket, but oil and trade issues are still fluid."The finance ministry, RBI and Sebi
