HYDERABAD: “There is no evidence of loss of trust in banking or a tendency to withdraw deposits. So, there is no question of banks going insolvent,” Y Venugopal Reddy, former governor of Reserve Bank of India, said on Thursday. He was answering a question ‘Is there a banking crisis in India?’ while delivering a lecture on ‘the State of Banking in India’ as part of the 7th KLN Prasad memorial lecture at the Administrative Staff College of India.
The lecture was delivered to commemorate industrialist KLN Prasad’s contribution to banking sector among several others. Reddy said that banking crisis was mostly due to macroeconomic instability, especially, in the financial sector. “But, there are no signs of any such instability,” he pointed. “The big problem in the banking system is the difference between what the depositor gets as interest and what borrower has to pay for a loan. The difference is high and reducing it is what needs to be done,” he said.
