In theory, without an extension, the country will lose access to any remaining bailout funds. The referendum announcement also raises severe questions over whether the debt-crippled country will be able to remain solvent and in the 19-state eurozone. Greece desperately needs a deal with its creditors.
The European Central Bank could manage those events with existing tools, including the activation of a "hyperactive" level of quantitative easing and purchases of sovereign bank debt on the primary market through the European Stability Mechanism.
ECB policy-setters held the limit on their emergency funding for the banks steady for the second day running, a source familiar with their talks said, having previously increased it steadily over many weeks.
Tsipras is in Brussels on Thursday to continue emergency talks with Greece's lenders after they rejected new reform proposals from his country earlier this week. Greece desperately needs further financial aid to avoid defaulting on its debt at the end of the month, but its creditors want an agreement on reforms before they release any more funds.
European markets turned lower following the statement, with Germany's Dax falling 1.2 percent and the Athens stock exchange down 3.3 percent minutes after the news emerged.
Euro zone leaders welcomed new budget proposals from Athens on Monday as a basis for further negotiations to unlock billions of euros in frozen aid and avert a default that could trigger a Greek exit from the single currency area.
With nervous Greek savers and firms withdrawing billions of euros in cash from accounts, the country's banks are almost entirely dependant on central bank funding to avoid collapse and potentially dragging down the country with them.
MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.3 percent, while Japan's Nikkei share average jumped 1.2 percent to a fresh 15-year high as investors bought back shares they sold in three losing weeks.
If the much-awaited Greek deal fails, the Reserve Bank will have to sell as much as USD 15 billion to defend the rupee at 65 levels, says a report.
It is not clear what concessions have been offered by either side, but Greek premier Alexis Tsipras detailed what his office called a "mutually beneficial deal" in a phone call with German Chancellor Angela Merkel, French President Francois Hollande and European Commission President Jean-Claude Juncker.
EU chief executive Jean-Claude Juncker's chief-of-staff spoke of a "forceps delivery" as officials worked late into the night to produce a deal ahead of a summit of euro zone leaders in Brussels that they hope can keep Greece in the currency bloc.
Greece's Prime Minister Alexis Tsipras submitted a new reforms package Sunday, offering the potential for a last minute deal to break the logjam in talks with the country's international creditors. Greece desperately needs more aid before it runs out of cash and potentially defaults on loans to creditors.
In the streets of Athens, there were no visible signs of distress or larger than usual lines at banks or supermarkets. Officials, however, signaled an increase in withdrawals and transfers, which can also be made electronically.
The Bank of Greece said the country's future in the European Union itself could also be at risk without a deal, underlining the extent to which officials who once refused any suggestion of "Grexit" are now openly discussing the prospect.
The banking source told AFP the increase was "sufficient" to meet bank needs but did not divulge the total level of funding available to them this week.
Greek banks are currently reliant on a loan program offered by the European Central Bank known as Emergency Liquidity Assistance (ELA). This is designed to provide credit to financial institutions in the euro zone that are solvent but face "temporary liquidity problems."
Greek banks are solvent and could withstand some stress but would run into trouble if the Greek government were to default, European Central Bank Governing Council member Klaas Knot told the Dutch parliament on Tuesday
Rupee is expected to move towards 65.60 before the end of December, 2015 and more towards 66-66.20 by Q1 2016, Arvind Narayanan, Head Of Sales, Treasury and Markets, DBS Bank told CNBC-TV18.
While the odds are not viewed as high, there is some talk that if a looming Fed rate hike coincides with already anxious markets, the reaction could become jarring enough to give the central bank pause.
Draghi said that the ECB had extended around 118 billion euros (USD 133 billion) to Greek banks in 2015, more than double the amount in 2014 and equivalent to around two-thirds of Greece's gross domestic product (GDP).
Greece's Prime Minister Alexis Tsipras is to hold an emergency government meeting at midday London time, according to Greek media reports.
Talking to CNBC-TV18, Sarah Hewin, Senior Economist, Standard Chartered said the two main concerns for mutual agreement between Greece and IMF are pension scheme and VAT.
Talks on ending a deadlock between Greece and its international creditors broke up in failure on Sunday, with European leaders venting their frustration as Athens stumbled closer towards a debt default that threatens its future in the euro.
Greek Prime Minister Alexis Tsipras was under intense pressure to deliver crucial concessions to international creditors on Thursday to break a four-month deadlock and save his country from looming default that could pitch it out of the euro zone.
This limit can be utilised for working capital and also refinancing of the outstanding working capital rupee loan availed from the domestic banking system. In another notification, the RBI said the scheme of raising ECB for low-cost affordable housing projects will continue for the financial year 2015-16.