YES Bank fiasco: RBI asks states not to withdraw funds from private banks

'We strongly believe that such a move can have banking and financial sector stability implications,' the letter stated

The Reserve Bank of India (RBI) on Thursday urged the chief secretaries of all states to not withdraw deposits from private sector banks for the sake of financial sector stability, and assured them of the safety of these funds.

The government of Maharashtra recently closed one account with Axis Bank, and decided to transfer funds from the private sector to public sector banks. The state government also advised its various departments to not put funds with private sector banks in view of the YES Bank fiasco. A few other state governments are also contemplating similar actions.

“We strongly believe that such a