RBI keeping a close eye on Credit Suisse crisis

Even though the Switzerland's second-biggest bank, Credit Suisse rallied on the stock market on Thursday after grabbing a $54 billion central bank lifeline in a bid to restore investor confidence, as per reports India's Reserve Bank is keeping tabs on developments related to Credit Suisse bank.

“Given the relevance of Credit Suisse to India’s banking sector, we see softer adjustments in assessment of counter-party risks, especially in the derivative market,” according to analyst Prakhar Sharma of Jeffries.

Beleaguered Swiss bank Credit Suisse is one of the top 15 foreign banks in India and owns assets worth more than Rs 20,000 crore, as per a note by Jefferies.

As per the financial service provider Jefferies, 70 per cent of Credit Suisse's assets are held in the form of government securities. Moreover, its off-balance sheet items are seven times its total assets.

Sharma expects the nation’s central bank to watch for liquidity issues and counter-party exposure, and intervene as necessary. He sees institutional deposits moving more toward larger and quality banks in India.