Mumbai. RBI, the central bank that makes rules and monitors banks across the country, has expressed great concern about digital bank accounts. In the new guidelines, the Reserve Bank has called digital accounts a high-risk account. RBI has described the money deposited in digital accounts as hot money. This means that this money can be withdrawn quickly and this puts the bank at risk. According to the new rules of the Reserve Bank, banks will have to keep such retail savings accounts in the high-risk category. Because money can be easily withdrawn from these accounts through net banking or mobile banking.
Lessons from banking crisis abroad
RBI’s decision regarding digital accounts has been taken in view of the problems faced by Silicon Valley Bank last year. As soon as people got to know about the bad financial condition of this bank, they withdrew all their money through digital mode within a few hours.
As per the new RBI guidelines, banks will have to set a high ‘run-off factor’ in the liquidity coverage ratio on retail deposits, which can be accessed through internet and mobile banking. The run-off factor is the portion of the deposited amount that is expected to be withdrawn first in case of a crisis.
This is necessary for the well-being of banks in bad times
The purpose of the LCR rules issued by the RBI is to ensure that banks have sufficient liquid assets to meet short-term responsibilities during an economic crisis. However, the Reserve Bank has sought suggestions on these guidelines. The new LCR rules will be implemented from April 1, 2025.
Earlier, the Reserve Bank had also expressed concern over the declining deposits in banks for some time. In fact, it was revealed in a report that instead of depositing money in bank schemes, people are investing money in the stock market or other places.
Tags: Bank account, Bank Loan, Business news, RBI Governor
FIRST PUBLISHED : July 26, 2024, 15:44 IST