RBI guv urges people not resort to panic buying; says Indian banking system is safe

Allaying depositors' concerns, RBI Governor Shaktikanta Das on Friday asserted there Indian banking system is safe, and termed linking banks' share prices to safety of deposits as "fallacious" thinking.

The comments, which came after a massive correction in banking stocks following the Yes Bank crisis and coronavirus outbreak, also urged depositors not to resort to panic withdrawals.

"Let me reiterate that the Indian banking system is safe and sound.

"In the recent past, COVID-19 related volatility in the stock market has impacted share prices of banks as well, resulting in some panic withdrawal of deposits from a few private sector banks. It would be fallacious to link share prices to safety of deposits," Das said.

Depositors of commercial banks including private sector banks need not worry on the safety of their funds, he added.

"I would, therefore, urge members of public as well as the public authorities, who have deposits in private sector banks, not to resort to any panic withdrawal of their funds," Das said.

It can be noted that a few states like Maharashtra had urged all the departments to pull out money from private sector banks despite previous communication from the RBI not to do so.

Yes Bank witnessed massive withdrawals ahead of being put under a moratorium by the RBI, but has been reporting normal activity since the restrictions removed on March 18.