industry

RBI allays depositors fears, assures safety of deposits


MUMBAI: The Reserve Bank of India on Sunday allayed fears of bank depositors and assured the safety of their deposits. The banking regulator added that the right way to measure a lenders solvency was its capital to risk weighted assets and not the market capitalisation.

Some media reports have been claiming poor health of Indian banks on the basis of the deposit versus market capitalisation ratios.

“Concern has been raised in certain sections of media about safety of deposits of certain banks,” the RBI tweeted. “This concern is based on analysis which is flawed. Solvency of banks is internationally based on Capital to Risk Weighted Assets (CRAR) and not on market cap. RBI closely monitors all the banks and hereby assures all depositors that there is no such concern of safety of their deposits in any bank.”

The safety of bank deposits have shot once again to the fore after the RBI placed private lender Yes Bank under moratorium and capped its withdrawals at Rs 50,000. This comes close on the heels of the collapse of Punjab and Maharashtra Co-operative bank where several depositors are yet to get their monies.

The RBI has come up with a restructuring plan to give a new life to Yes Bank that would entail a minimum equity investment of Rs 2450 crores by the State Bank of India, but that would keep these entities separate leaving scope for the state-run lender to exit the investment when it turns profitable. The plan also entails wiping out about Rs 8,700 crore invested by bond holders in AT1 instruments.





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