“Today about 20 per cent of the bond issuances in Asia is from India. Indian banks have come in late, but have grown from nothing to being large issuers. There is need to raise capital and funds,” said Mr Grainger. While the accelerated pace had caused structural weaknesses, there is no need to panic yet, he pointed out.

“Because Indian banks have issued huge amounts of bonds, at the first signs of market weaknesses there has been a tendency to sell off Indian bonds. We are seeing signs that India is no longer singular and Indian papers may become saturated. We are starting to see countries such as Vietnam and Pakistan entering the space,” he said.

However, this had nothing to do with the fundamental credit and there was no need to panic yet, Mr Grainger added. While the demand for Indian bonds is $ 10.5 billion, the supply is only $ 2 billion. “Indian banks haven’t over issued. They have just issued a lot, very quickly,” he pointed out.

Indian banks are still way behind the top issuers in the global primary market. For instance, in 2007, till date, Banco Santander from Spain has issued $ 72 billion, KFW from Germany - $ 59 billion, European Investment Bank - $ 52 billion, BBVA Spain - $ 40 billion, General Electric – $ 39 billion and Indian banks - $ 6 billion.

Indian banks could also look at other options such as US private placements, tapping new countries currencies for bond issuances and using medium term note programmes, Mr Grainger added.