Reserve Bank of India Governor D. Subbarao Thursday said that the European debt crisis is not expected to impact big on India, yet the central Indian bank is keeping a watch.

"From the present scenario we do not foresee that there would be a big impact on us, but we are keeping a close watch," Subbarao told reporters after the RBI Board meeting in Thiruvananthapuram.

Policy makers are concerned that the debt crisis in Greece, Portugal and Spain may undermine economic growth. Finance Minister Pranab Mukherjee said in an interview with a televison channel Wedenesday the government will protect the Indian economy from the crisis in Europe.

"Twentyseven percent of the trade that our country has is with Europe. If the services sector is hit, then there could be a weakening of the Re against Euro and Pound," he said.

He said the central bank is closely studying the crisis.

On making rupee fully convertible in the present domestic and international economic scenario, Subbarao said, "For that we have to traverse a long way".

Recently, a  crisis of confidence in Europe has been triggered by a potential debt default by Greece. The European Union and the International Monetary Fund (IMF) have announced a $1 trillion emergency financial aid package, which is expected to stabilise world financial markets and curb speculative attacks on the Euro.