Monitoring of Reserve Bank on deposits and liquidity status of private banks

Mumbai, Ta. March 14, 2020, Saturday

Following the chapter of Yes Bank, the Reserve Bank has begun to monitor the status of deposits and liquidity of private banks, considering how many state governments are advising their subsidiaries and departments not to keep money in private banks. State governments are asking their departments to withdraw money from private banks and turn them into public sector banks.

This kind of attitude of the state governments has shaken the confidence of the holders at the retail of private banks. In order to maintain the trust of the holders, some private sector banks are also being forced to issue special statements regarding their financial health.

The Reserve Bank is seeking information on the withdrawal of deposits from private banks and their liquidity status so that they can intervene if required, the Reserve Bank sources said.

The Reserve Bank has also objected to the state governments not to withdraw deposits from private banks and there is also a misunderstanding regarding the financial health of private banks.

Moving deposits from private sector banks to the financial sector may pose a risk to the stability of the financial sector. State governments are also told that it is not appropriate to look at each bank at a glance.