The Reserve Bank of India (RBI) on Thursday took notice of media reports about the closure of some public sector banks and clarified that the central bank’s measures are “not intended to constrain normal operations of the banks for the general public. News agency ANI quoted the RBI’s stand in a couple of tweets.
RBI’s clarification came a day after media reports emerged about the shutting down of PSU banks in the wake of the central bank initiating ‘prompt corrective action’ (PCA) against Bank of India (BoI) and United Bank of India (UBI) on December 20. Both UBI and BoI came under RBI’s scanner for reasons like high net NPA (Non- Performing Assets), low leverage ratio and the need to raise capital based on the bank’s position.
The government too dismissed such rumours saying that on the contrary it is planning to strengthen the state-owned banks.
“No question of closing down any Bank. Government is strengthening PSBs by 2.11 lakh crore recapitalisation plan. Do not believe rumour mongers. Recap, Reforms roadmap for PSBs firmly on track,” said financial services Secretary Rajeev Kumar in a separate tweet.
Apart from BoI and UBI, RBI had earlier initiated similar action against other public sector banks including IDBI Bank, Indian Overseas Bank and UCO Bank.
Last month, a three-member ministerial panel led by finance minister Arun Jaitley was set up consider merger proposals from banks and also nudge some of them to combine with each other. Since the announcement of a Rs 2.11 lakh crore package for PSU banks, the government has been deliberating upon merging banks with higher bad loans with banks that are enjoying better financial health.