RBI assures safety of bank deposits in wake of Yes Bank crisis

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Mar 09, 2020

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RBI assures safety of bank deposits in wake of Yes Bank crisis

PTI

The Reserve Bank of India (RBI) has assured depositors that there is no concern regarding the safety of their deposits in any bank. The Reserve Bank of India said in a tweet yesterday that as Yes bank's financial matter came up, a concern raised in certain sections of media about the safety of deposits of certain banks. This concern was based on analysis which is flawed.

The RBI stated that the solvency of banks is internationally based on Capital to Risk Weighted Assets Ratio (CRAR) and not on market capitalization. The Apex bank added that it closely monitors all the banks and hereby assures all depositors that there is no such concern of the safety of their deposits in any bank. Earlier, Chief Economic Adviser K V Subramanian also said that the m-cap ratio is an incorrect way to measure the safety and solvency of a bank. He further added that Capital to Risk (Weighted) Assets Ratio (CRAR) is the standard measure for the safety of a bank. Pointing out figures, the CEA said that Indian banks have 80 percent more capital than the globally mandated norm for CRAR. He stated that the global norm for CRAR is eight percent. Compared to that, Indian banks have on average 14.3 percent CRAR which indicates that Indian banks have 80 percent more capital than the globally mandated norm.