SME Times News Bureau | 05 Jun, 2010
India has cleared on Friday that it does not favor taxing banks to create a corpus for future bailouts and stressed the importance of well-placed regulations to detect and contain any deviation in financial institutions' functioning.

Finance Minister Pranab Mukherjee made this clear during talks with Sakong Il, chairman of the presidential committee for G-20 finance ministers meeting, in the South Korean city of Busan.

The levy idea is backed by the United States and Europe. Developing nations plus Australia and Canada oppose it, saying their banks did not trigger the 2008-9 financial crisis and should not have to pay for cleaning up the mess.

Mukherjee said India's banking system could withstand the trouble, mainly because of well-placed regulations.

Indian banks had largely remained unaffected during the global financial crisis, which saw many large banks based in the US and Europe go under or seek state help to stay afloat.

Both Mukherjee and Sakong, a former finance minister of South Korea, said the G-20 will be able to play a major role in the global economic recovery, reflecting the change in the balance of power in the world.

"This is all the more relevant as various advanced and developed economies have failed to resolve their financial problems on their own," the two leaders said in a joint statement, released here by the finance ministry.

Both hoped that Europe could contain the euro zone damage with a support package for debt-ridden countries such as Greece worth $1 trillion.

Mukherjee is scheduled to attend the four-nation BRIC (Brazil, Russia, India and China) meeting later in the day before taking part in the G-20 ministerial meeting.