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Yes Bank's rescue made smaller private banks more vulnerable, says Moody's

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MUMBAI : Moody’s on Tuesday said that Yes Bank’s default, the consequent rescue by Reserve Bank of India (RBI) and the government when the covid-19 outbreak was intensifying, has made smaller private sector banks more vulnerable.

According to Moody’s, among other consequences, it risks undermining depositor confidence in private sector banks as a whole, whereas public trust in public sector banks (PSBs) will remain strong, underpinned by a perception of strong government protection. “As a result, some private sector banks, particularly, smaller institutions will lose deposits to PSBs, weakening their funding profiles," it added.

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