Yes Impact of the banking crisis: your money is safe, private banks tell depositors

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Mumbai: The Yes Bank crisis is having a contagious impact on other private banks, forcing these lenders to clarify their position and address depositors’ concerns about their capital base and liquidity.

RBL Bank,

and, in separate communications to their clients, clarified that rumors regarding their financial health and stability are false and not based on fact. It also follows a clarification from the RBI on the safety of bank deposits on Sunday.

“Concerns have been expressed in some sections of the media about the safety of certain banks’ deposits. This concern is based on an analysis that is flawed. The solvency of banks is internationally based on risk weighted capital (CRAR) and not on market capitalization. RBI closely monitors all banks and hereby assures all depositors that there is no concern about the security of their deposits at any bank, ”RBI said in a two-part tweet.

The RBI tweets were a response to a flawed comparison by a news channel between the deposit ratio and market capitalization of private sector banks, which then went viral via Whatsapp Forward. On Monday and Wednesday, these lenders also issued statements debunking these theories. In a statement released on Wednesday, stressed that this is fundamentally a strong institution.

“Rumors regarding the financial health and stability of the institution, especially in social media, appear to be misplaced, motivated and not based on fact,” the bank said, adding that its CRAR at 16.08% is above the prescribed minimum of 11.5% and The short-term liquidity ratio (LCR) stood at 145% of regulatory requirements as of the end of last week.

Likewise, the South Indian Bank (SIB) on Monday pointed out that its CRAR at the end of January was 13.12%, higher than the 10.87% prescribed by the RBI. “SIB is a pan-Indian bank with over 900 offices and a significant business of Rs 1.50 lakh crore as of December 31, 2019. The bank’s operating profit has steadily increased by Rs 884 crore during the year 2013-14 at Rs 1,239 crore in fiscal year 2018-19, ”the bank said.

Karnataka Bank COO YV Balachandra also expressed concerns in a letter to employees. “A bank’s solvency cannot be measured minute by minute with the evolution of market capitalization. The Market Cap Ratio is a malicious and deceptive invention by a particular TV station and is an incorrect way of assessing the safety of banks. It can be noted that the bank has consistently maintained the CRAR well above the regulatory requirement of 9%.


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