New Delhi: On the wake of Yes Bank crisis, the Reserve Bank of India (RBI) has asked State Governments not to withdraw their deposits out of private sector banks.
Attempting to restore faith in the private sector banks, the RBI said that apprehensions about the safety of deposits in private lenders are highly misplaced.
The RBI has reportedly written a letter to Chief Secretaries of all States and stated that 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.
RBI in its letter requested all State Governments to reconsider any decision they might have taken in this regard or are in the process of taking such decision.
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.
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