Yes Bank Crisis Impact on Other Private Banks

Yes Bank Crisis

The impact of the Yes Bank crisis on other private banks has made their position doubtful in the eyes of the public. The situation has forced them to clarify their position and address all the concerns of the depositors.

South India Bank, Karnataka Bank and RBL Bank have clarified their position and the rumours to their customers. They added that the rumours are untrue and are not based on any facts. On Sunday the RBI clarified the safety of banking deposits following this incident.

RBI said in a two part tweet, “Concern has been raised in certain sections of the media about the safety of deposits of certain banks. This concern is based on analysis which is flawed. Solvency of banks is internationally based on capital risk weighted assets (CRAR) and not on market cap. RBI closely monitors all the banks and hereby assures all depositors that there is no such concern of safety of their deposits in any bank.”

A news channel made a comparison between the ratio of deposits and the market capitalisation of private sector banks, which later went viral on Whatsapp too. The tweets of RBI were a response to this comparison.

The RBL bank, in a statement said it is fundamentally a strong institution. “Rumours around financial health and stability of the institution, especially in social media, seem to be misplaced, motivated and not based on facts,” added the bank.

The South India Bank pointed out it CRAR at January end, which was more than the RBI prescribed. The bank said, “SIB is a pan-Indian bank with more than 900 offices and a sizeable business of Rs. 1.50 lakh crore as on December 31, 2019. The bank’s operating profit has grown steadily from Rs. 884 crore in fiscal 2013-14 to Rs. 1,239 crore in fiscal 2018-19.”

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