ATHENS/ NEW DELHI/MUMBAI: Financial markets around the world shuddered as Greece, teetering on the brink of a debt default, shut down banks for a week and imposed a daily ATM withdrawal limit of 60 euros (foreign tourists were exempt).

Late Monday night, just as we were about to go to press, a Greek government official confirmed that his country would not repay a 1.6 billon euro loan instalment due to the IMF on Tuesday, with uncertain consequences for its future in the eurozone and even in the European Union.

The sudden shutdown led to long queues outside ATMs, fuel pumps and supermarkets in Greece even as rumours spread that the government may have to halt pension payouts. There were reports that many ATMs had run out of cash.

Against the backdrop of nervous global markets, the sensex slumped by over 600 points in early trade (before closing 167 points down) even as policymakers played down fears of a severe impact on the broader economy. Oil prices fell in early trade, while gold inched up. The rupee closed 29 paise lower at 63.73 to the dollar after having touched an intra-day low of 63.89.

"The Greece crisis does not directly affect India. (But) interest rate may firm up in Europe, which could lead to an outflow of capital from India," finance secretary Rajiv Mehrishi said (global money tends to go wherever it gets higher returns).

Greek Prime Minister Alexis Tsipras interrupted last-ditch debt negotiations with the announcement that he was calling a referendum for July 5 on whether to accept the tough terms offered by international creditors. I

Economists said the direct impact on India was likely would be marginal; its record high foreign reserves of $355 billion would act as a cushion against any wild swings.

But they warned of a possible adverse impact on certain large Indian companies operating in Europe in the event of a sharp depreciation of the euro.

While the Greek crisis has been brewing for some time, developments over the weekend deepened its woes.

Creditors want Greece to cut pensions and raise taxes in ways that Tsipras has long argued would be counter-productive. The Greek say further austerity will simply deepen one of the worst economic crises of modern times in a country where a quarter of the workforce is already unemployed.