: RBI asks state govts not to move deposits out of pvt banks #FinanceIndia #StockMarketNEWS #Business PTI New Delhi The Reserve Bank of India (RBI) has asked state governments not to transfer

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RBI asks state govts not to move deposits out of pvt banks #FinanceIndia #StockMarketNEWS #Business
PTI



New Delhi



The Reserve Bank of
India (RBI) has asked state governments not to transfer their deposits out of
private sector banks saying apprehensions about the safety of deposits in
private lenders are highly misplaced.



In a letter written to
chief secretaries of all states, the central bank said moving deposits out of
private sector banks could have implications for banking and financial sector
stability.



The letter came after
reports suggested that some state governments have advised government bodies
and other entities under their jurisdiction to transfer their funds held with private
sector banks to public sector lenders. This follows the crisis at Yes Bank
where the RBI has superseded the bank’s board and placed restrictions on
withdrawals.



“We strongly believe
that such a move can have banking and financial sector stability implications,�
the RBI wrote.



“We feel that
apprehension on the 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.�



It requested state
governments to reconsider any decision they might have taken in this regard or
are in the process of taking such decision. “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,â€? the letter
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
retaining 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 we are making every effort to
expedite the finalisation of the scheme,â€? it added.  
The post RBI asks state govts not to move deposits out of pvt banks appeared first on The Navhind Times.

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