No need to worry about the safety of deposits in banks

The country’s central bank on Sunday assured depositors that there is “no concern regarding the safety of their deposits in any bank”. “Concern has been raised in certain sections of media about the safety of deposits of certain banks. This concern is based on analysis which is flawed. Solvency of banks is internationally based on Capital to Risk (Weighted) Assets Ratio (CRAR) and not on market capitalization,” RBI tweeted.

Chief Economic Advisor KV Subramanian; who said that the m-cap ratio is an incorrect way to measure the safety and solvency of a bank proffered a similar assurance. “The m-cap ratio is a totally incorrect measure to assess the safety or solvency of a bank. Instead, what experts and regulators worldwide use is CRAR. The global norm for CRAR is 8 percent. Compared to that, our banks have on average 14.3 per cent CRAR,” he stated.