Clarification needed from RBI: Is 100% repayment of deposits guaranteed?

This refers to "YES Bank gets 60k crore line of credit from RBI" (March 19). The article quotes Reserve Bank of India (RBI) Governor Shaktikanta Das as saying: "Never in the history of banks (in India) have depositors lost money…” The point made is that depositor's money is absolutely safe. This may mislead gullible public to deposit money in a bank, irrespective of its financial health. I remember that during the Second World War, numerous banks mushroomed all over the country and in the post-war period, almost all of them became defunct causing depositors to lose their money. Only a few banks were saved by being merged into a larger bank. The liability of the shareholder of a bank is limited. If the value of bank assets are inadequate to meet the bank's liabilities, in case of any liquidation process, its depositors will not get back their money, except the amount guaranteed under the Deposit Insurance Scheme (proposed to be increased now from Rs 1 lakh to Rs 5 lakh).

I wonder even in the case of nationalised banks whether a 100 per cent repayment of deposits is guaranteed. However, the public may like to believe that the government has a moral responsibility to repay. To remove any doubt in the mind of the public, some clarification about the statement purported to have been made by the RBI governor should be urgently issued. Biswajit Sen  Kolkata

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