Bhubaneswar, Mar 14(Local Wire): The Reserve Bank of India (RBI) has cautioned the state government against withdrawing their funds languishing in private banks and deposit it into the public sector banks saying that such acts could disrupt the banking system.
It also said that the central banking regulator is potent enough to safeguard the interests of the depositors.
RBI has now written a letter to the Odisha Chief Secretary Asit Tripathy and cited some media reports which hinted at the act.
The letter from RBI Deputy Governor NS Vishwanathan said, “It has been observed from certain media reports that some state governments have advised government bodies and other entities under their jurisdiction to transfer their funds held with private banks to public sector banks. We strongly believe that such a move can have banking and financial sector stability implications.”
The correspondence between RBI and Odisha government comes in the backdrop of speculations over the huge deposits of Srimandir in the troubled Yes Bank.
“We feel that the apprehension about safety of deposits in private sector banks is highly misplaced and will not be in the interest of stability of the financial system in general and the banking system in particular,” read the letter addressed to Odisha Chief Secretary.
Trying to repose faith on the banking regulator, the letter further said, “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,” it said.