RBI Warns State Government Against Moving Temple Funds

The Reserve Bank of India (RBI) has issued an advisory for the state government against moving deposits from private banks to public sector banks. The advice has been issued in the wake of the Yes Bank crisis as it might have ‘stability implications’ on the ‘banking and financial sector’.

In a letter sent to Chief Secretary Asit Tripathy, deputy governor of RBI N S Vishwanathan assured that the depositors’ money is secure in the private banks as the RBI has sufficient powers to ensure its safety. Similar letters were sent to other state governments as well.

The letter comes at a time when the government is dealing with soaring uncertainty regarding funds worth Rs 545 crore deposited in Yes Bank accounts by Puri Jagannath Temple.

Odisha’s Finance Minister Niranjan Pujari earlier wrote a letter to Nirmala Sitharama seeking clarification on this matter. The temple authorities also sought the intervention of RBI to transfer funds to their UCO bank account.

“Some states have advised government bodies and entities under their jurisdiction to transfer funds held with private sector banks. It is pertinent to mention that the resolution of weak private sector banks in the past has been done in a manner that the depositors are not put to loss. It is precisely with a view to refraining depositors’ confidence in private sector banks and mitigating hardships, that after the imposition of a moratorium on Yes Bank, the RBI had drawn up a draft scheme without any delay and we are making every effort to expedite the finalization of the scheme”, stated RBI in a letter.