The Reserve Bank of India (RBI) was the only bank in the world that was well prepared for the financial crisis of 2008 under the leadership of former governor YV Reddy, said D Subbarao, former central bank governor on Friday.
In an exclusive interview to CNBC-TV18, Subbarao said Lehman Brothers filed for bankruptcy on September 16 during the day in New York, which was night time for us in India.
Watch: D Subbarao says 2008 financial crisis impacted emerging markets more than expected
Recollecting that fateful day, Subbarao said, "I recall Shyamala (Gopinath), who was deputy governor at that time, waking me up around 2 o’clock and telling me that Lehman Brothers has collapsed and that there might be some instability in the advanced economy markets and we must be prepared."
According to Subbarao, YV Reddy had instituted 'macro prudential' measures ahead of the meltdown and post the crisis, it became a fashionable term.
Subbarao said on September 15 midnight, he was was just ten days into his job as governor of RBI adding that, bank was not completely unaware of the pressure building up in the financial system.
"If you throw your mind back to that period, you would find that in the week to ten days before the crisis, there were a number of US institutions falling one by one starting with Fannie Mae, Freddie Mac, Countrywide, AIG, Merrill Lynch and several other banks in the was closed," Subbarao added.
Former governor said, "There were isolated instances in the week to ten days leading to Lehman collapse, but Lehman event was a big bang event."