RBI asks state govts not to move deposits out of private banks

The Reserve Bank of India has advised state governments against transferring their funds from the private banks. Is has said that any fears about the safety of their funds in such banks are highly misplaced. The bank has written to the chief secretaries of states that moving the deposits from private to the public sector banks could destabilise the banking and financial sector.

The bank has urged the state governments to reconsider any such decision.

The RBI letter came amid reports that following the Yes Bank crisis, some state governments had advised entities under their jurisdiction to shift their funds from private to the public sector banks.