Bhubaneswar: Stating that apprehensions about the safety of deposits in private banks are highly misplaced, the Reserve Bank of India (RBI) has asked state governments not to transfer their deposits out of private sector banks.
In a letter written to Chief Secretary Asit Tripathy, RBI deputy Governor NS Vishwanathan said, “It has been observed from certain media reports that some state governments have advised government bodies and other entities under their jurisdiction to transfer their funds held with private banks to public sector banks. We strongly believe that such a move can have banking and financial sector stability implications.”
The RBI has written to Tripathy in the wake of the row over deposit of Srimandir’s fund in Yes Bank where the RBI has superseded the bank’s board and placed restrictions on withdrawals.
“We feel that the apprehension about safety of deposits in private sector banks is highly misplaced and will not be in the interest of stability of the financial system in general and the banking system in particular,” read the letter.
The Central bank requested the state government to reconsider any decision they might have been taken in this regard. “The Reserve Bank has adequate powers to regulate and supervise the private sector banks and by using these powers, it has ensured that the depositors’ money is entirely safe,” it said.
The RBI said the resolution of weak private sector banks in the past has been done in a manner that the depositors are not put to loss.
“It is precisely with a view to retain depositors’ confidence in private sector banks and mitigating their hardship that, after the imposition of a moratorium on Yes Bank Ltd, the RBI has drawn up a draft scheme without any delay and is making every effort to expedite the finalization of the scheme,” it added.