March 18 (Reuters) - A coalition of midsize U.S. banks, Mid-Size Bank Coalition of America (MBCA), has asked regulators to extend FDIC insurance to all deposits for the next two years, Bloomberg News reported on Saturday citing an MBCA letter to regulators.

The letter argued that extending insurance will immediately stop the exodus of deposits from smaller banks, which in turn will stabilize the banking sector and restore confidence in banking system, the report said.

The collapse of Silicon Valley Bank, which held a high number of uninsured deposits beyond the FDIC guaranteed limit, prompted customers to move their money to bigger banks and triggered sharp selloff in banking stocks.

According to the Bloomberg report, the group proposed that the expanded insurance program be paid for by the banks themselves by increasing the deposit-insurance assessment on lenders that choose to participate in increased coverage.

The FDIC did not immediately respond to a Reuters request for comment while MBCA could not be immediately contacted.

(Reporting by Urvi Dugar in Bengaluru; Editing by Daniel Wallis and Deepa Babington)