RBI assures Yes Bank depositors before end of moratorium

MUMBAI: Reserve Bank of India (RBI) governor Shaktikanta Das stepped out of the comfort zone to assure that Yes Bank bail-out package is a `credible and a sustainable one and that all the deposits are safe.

In a hurriedly called press conference the governor expressed confidence that the depositors of the bank will remain “loyal” even as he reiterated that the RBI will offer necessary liquidity support if required.

“Depositors money is absolutely safe and there is no reason for any undue worry. Depositors need not be in a rush to withdraw. Never in the banking history of India have depositors lost money. The present scheme also protects the interest of depositors,” Das said.

Unlike previous instances in bank failures in India, RBI this time has chosen not to merge the sick Yes Bank with a healthy one but instead has prepared a reconstruction plan in which a eight member consortium led by State Bank of India (SBI) have invested Rs 10,000 crore in the bank.

According to scheme the bank’s moratorium ends on Wednesday and depositors do not face any restrictions on withdrawals from Thursday.

Das hoped that depositors continue their loyalty to the bank. “Large number of depositors remained loyal to the bank. I do expect them to continue their loyalty because a large part of the banking sector has invested in the bank. Our interactions with SBI and others gives us confidence that it is a sound and solid plan,” Das said.

He also said that some state governments’ advisory on withdrawal of deposits from private sector banks were ill-advised as they are also an essential part of the banking system.

Source Article

Lois C. Ferrara

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