Indian banking system safe and stable, no need to panic: RBI

MUMBAI: The Reserve Bank of India (RBI) has assured the general public that the Indian banking system is safe and stable and there is no need for panic based on rumours. 

The central bank also issued a statement saying that the Indian banking system was ‘safe and stable’.

The RBI issued the statement on Tuesday when the Nifty Bank index tanked by 1.30 per cent in intra-day trade amid a barrage of negative news from the sector, including a deepening crisis at the Punjab and Maharashtra Co-operative Bank (PMC).    

"There are rumours in some locations about certain banks including cooperative banks, resulting in anxiety among the depositors. RBI would like to assure the general public that Indian banking system is safe and stable and there is no need to panic on the basis of such rumours," the Reserve Bank said in a tweet.    

There are rumours in some locations about certain banks including cooperative banks, resulting in anxiety among the depositors. RBI would like to assure the general public that Indian banking system is safe and stable and there is no need to panic on the basis of such rumours.

— ReserveBankOfIndia (@RBI) October 1, 2019

Bank stocks lost heavily on both the Sensex and Nifty indices on Tuesday over concerns regarding stress in the financial system.    

Shares of commercial banks took a beating on Tuesday as a crisis of confidence gripped the banking sector. Private sector lender Yes Bank’s shares tanked 22.8% on Tuesday, after declining 15% on Monday. It closed the day at ₹32.00.

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Another private lender RBL Bank’s shares fell 8.7% on Tuesday, while IndusInd Bank stock went down by 6.3%. Troubled mortgage financier Dewan Housing Finance’s stock declined 20%.

Private banks’ shares also took a beating due to concerns overexposure to the non-banking financial sector. The Sensex closed 361.92 points, or 0.94% lower, to close at 38,305.41 points.