YES Bank Crisis: RBI Asks Odisha Govt Not To Withdraw Funds From Pvt Banks

Bhubaneswar: Following the Maharashtra government’s decision to close one account with Axis Bank, the Reserve Bank of India (RBI) on Thursday urged the chief secretaries of all states not to withdraw deposits from private sector banks and assured them of the safety of these funds.

“We strongly believe that such a move can have banking and financial sector stability implications,” the letter, signed by RBI Deputy Governor N S Vishwanathan, stated.

Following the YES Bank fiasco, several states, including Odisha, had been contemplating a similar move.

The RBI Deputy Governor also allayed the fears of the Odisha government over safety of the Jagannath Temple funds parked in the crisis-hit private bank.

In a letter to Odisha Chief Secretary Asit Tripathy, he said, “We would like to point out that 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.”

He also requested the Odisha government to reconsider any decision to withdraw or transfer funds deposited by it and its entities in private sector banks.

To retain depositors’ confidence in private sector banks and mitigating their hardship, the RBI has drawn up a draft scheme without any delay and is in the process of finalising it, the letter added.