Public unease due to the deteriorating condition of several banks
Banking stocks have witnessed a slump over the past two days
Rumors had spread about the imminent shutdown of various government banks
The Reserve Bank has assured that banks are strong and stable
The Reserve Bank of India has declared that our banking system is extremely resilient, urging the public to remain calm in the wake of problems emerging within commercial and cooperative banks. Following these disturbances, there was a significant drop in banking shares on Tuesday.
In a statement, the Reserve Bank mentioned, 'Misinformation about certain banks has led to depositor anxiety in various places. The RBI wants to assure the public that the Indian banking system is secure and stable, and there is no basis for panic due to these rumors.'
Source: aajtak
It is noteworthy that last week the Reserve Bank had also dispelled the rumors about the closure of 9 public banks. Recently, the government announced the merger of 10 public banks into 4 larger ones as part of a bank consolidation plan.
The Reserve Bank had emphasized that the government intends to fortify the public banks and that there was no question of any bank shutting down. Recently, the RBI took stringent action against Punjab & Maharashtra Cooperative Bank (PMC Bank) in Mumbai, and limitations were imposed on withdrawals by depositors, affecting millions of consumers.
Meanwhile, there have been reports of several private banks facing distress due to hefty loans issued to troubled NBFCs, which has led to a sharp decline in banking sector stocks over the last couple of days.
