No threat to banking deposits: IBA

"There is no threat to depositors money as our regulator and government take proactive steps of change in management or mergers of banks whenever such risks arise in banking system," IBA's Chief Executive Officer (CEO) Sunil Mehta said.

Mumbai: Allaying fears among depositors following the Yes Bank crisis, banking lobby Indian Banks' Association (IBA) on Thursday said there is no threat to banking deposits.

The Reserve Bank of India (RBI) too had on Sunday assured depositors about the safety of their bank deposits.

The RBI had on March 5 imposed a moratorium on crippled Yes Bank, restricting withdrawals to Rs 50,000 per depositor till April 3.

"There is no threat to depositors money as our regulator and government take proactive steps of change in management or mergers of banks whenever such risks arise in banking system," IBA's Chief Executive Officer (CEO) Sunil Mehta said.

He further said there is no comparison between deposits and market capitalisation of banks.

Mehta said the action taken by the RBI and government on Yes Bank is in larger public interest.

On Wednesday, four private sector lenders Kotak Mahindra Bank, Karnataka Bank, RBL Bank and Karur Vysya Bank, in separate communications, assured customers about the safety of their money and the banks' strong capital positions.

Kotak Mahindra Bank said it is a financially strong and well-capitalised bank with a strong risk and corporate governance framework.

"Your deposits with us are absolutely safe," the bank said.

Mangaluru-headquartered Karnataka Bank said it has been consistently maintaining CRAR above the minimum prescribed by the RBI as well as its internal policy.

"Across the globe, the health of a bank is measured by referring to Capital to Risk Weighted Assets Ratio (CRAR) and not by referring to the so called M-Cap (market capital) to deposit ratio," Karnataka Bank's Managing Director and CEO Mahabaleshwara M S said in a statement.

Last week, Chief Economic Adviser Krishnamurthy Subramanian had also clarified that the m-cap ratio is not the right metric to measure banks' health.

(PTI Report)