The withdrawal of funds from the Indian equity markets and reduced access of the Indian entities to raise funds from the international markets put significant pressure on the dollar  BIS Review 165/2009  1  liquidity in the domestic foreign exchange market.
These developments created adverse expectations on the balance of payments (BoP) outlook and led to depreciation pressures on the Indian rupee and increased volatility in the foreign exchange market. 6. The banking sector was not affected as it had hardly any direct exposure to subprime assets. Moreover, banks were well capitalised and inherently sound.