New Delhi, Sep 7 (IANS) Finance Minister Pranab Mukherjee Wednesday said high inflation in India is caused partly due to the unfavourable policies adopted by the developed countries in the aftermath of the global financial crisis.

"Inflation challenge faced by India is partly an offshoot of the policy response in developed countries to the crisis," Mukherjee said at the 106th foundation day celebrations here of the public-sector Bank of India.

He said the financial crisis, which started from the US, has affected most parts of the world, including India, because of globalisation. "We are living in a globalised world. Globalisation has its benefits but also poses challenges. One such challenge was the global financial crisis."

The finance minister said the effect of the crisis was not over yet and many countries were still struggling to find a way forward.

"The global economy is still trying to cope up with the after-effects of the financial crisis," he said.

Mukherjee emphasised the need for taking bold and innovative steps to cope with the challenges posed by the financial crisis. "These are turbulent times and we should watch every step that we take. But this should not prevent us from taking bold and innovative steps."

Mukherjee asked banks to maintain the quality of their assets in view of the rising interest rates.

"The commitment to moderate levels of inflation has led to higher interest rates. In this environment, banks need to keep a strong vigil on their asset quality," he said.