Indian banks will not face any impact from global banking crises as they mostly depend on retail deposits, said UCO Bank MD & CEO Soma Sankara Prasad in an exclusive conversation with Moneycontrol recently.
"I don't think there’s any impact from recent banking crises globally as Indian banks depend to the extent of 90 to 95 percent on retail deposits. These are all small depositors spread all over the country, said Prasad.
Silicon Valley Bank, which was a key funding source for startups in the US, collapsed on March 10, followed by the failure of Signature Bank on March 12, triggering a banking crisis. The banking crisis is the biggest since the global financial crisis of 2007–2008.
In the backdrop of the US banking crisis, he said there should be no doubt about the position of public sector banks (PSBs).
"We don't depend on bulk deposits, and at the same time, for most of the banks, retail loans comprise almost 60 percent of the loan portfolio. Though we have our SLR (Statutory Liquidity Ratio) and all that, I think I don't see any impact on Indian banks as far as what is happening," Prasad said.
PSBs meeting with the finance ministry
The UCO Bank MD & CEO also attended a meeting chaired by Finance Minister Nirmala Sitharaman to review the performance of PSBs on various financial, efficiency and health parameters on March 25, 2023.
"The government of India holds a majority equity stake in most of the banks. So, the finance ministry does take a review of the performance of the banks, wherein all the parameters are discussed," he said.
Deposit insurance adequate
The Reserve Bank of India’s subsidiary Deposit Insurance and Credit Guarantee Corporation insures deposits in the case of bank failures.
Prasad said the maximum insured amount of Rs 5 lakh per account in India is quite adequate.
"I don't think we have the kind of issue as in the West, where it is quite normal for banks to fail. It doesn't happen in India. If you look at the last 10 years or 15 years, there has not been a single case where a bank has been allowed to fail. In that context, I think Rs 5 lakh is quite adequate," the MD & CEO of UCO Bank said.
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