10 Years of Lehman Brothers' Bankruptcy: Here's what it meant for India

"ICICI Bank UK Plc holds 57 million euro of senior bonds of Lehman Brothers Inc...Potential losses are not material," the bank had said in a statement.

KV Kamath, managing director and CEO and Chanda Kochhar,  joint managing director and CFO, came out with clarification stating that the bank was very much in sound position and that there was no need to panic.

Kochhar clarified that the exposure constituted less than 1 percent of subsidiary ICICI Bank UK Plc.’s total assets and less than 0.1 percent of the consolidated total assets of the ICICI group.

Nevertheless, investors and customers paid no heed to the statements as rumours did the rounds indicating that the bank was in trouble with major financial crunch.

However, ICICI Bank was not the only Indian lender with exposure to the US company. According to a Mint report, State Bank of India and Punjab National Bank (PNB) also had exposure. As per the report, analysts, on condition of anonymity, told that SBI had an exposure of around $55 million (Rs 256 crore), while PNB $5 million. However, the two were affected mildly.

Fall in ICICI bank shares in India and the Dow Jones index in the US further affected Indian stock market. Dow plunged more than 500 points or 4 percent on the day of bankruptcy filing, its worst point drop since the September 2001 terror attacks.

Further, within three months of bankruptcy filing, the BSE Sensex dropped 60 percent to 8,535 from around 21,000 levels due to global finance crisis, mainly caused by Lehman collapse.

In less than a month after he took over as the governor of the Reserve Bank of India, Duvvuri Subbarao, faced what came as a massive challenge for him as well as other central bankers, Lehman bankruptcy. However, Subbarao, being new to the world of central banking had fears over the handling of such situation.

“It will be dishonest to say I had no fears, concerns or anxiety at the time,” he was quoted by Bloombergquint.

Among the challenges that the central bank faced, it had to keep the markets going and deal with the rumours of ICICI's crunch as well as liquidity squeeze.

In terms of immediate action, the governor issued a statement in midnight saying that the central bank was watching the situation closely.

According to Subbarao, as he told ET, not only did the RBI reacted to what was happening in the markets, it also reacted to what advanced economies did as a measure.

"We did both the conventional and unconventional things. By conventional, we cut the SLR and CRR. We made foreign exchange liquidity easier by liberalising norms for ECB and NRI inflows and we cut interest rates by as much as 1 percent which was unprecedented. By unconventional measures, we gave lines of credit not only to banks but also to mutual funds and NBFCs," he said.

The country's GDP growth was hit severely with the rate dropping to 6.72 percent in 2008-09 from the previous rate of 9.32 percent.