RBI, Finance Ministry Dismiss Rumours On Closure Of 9 PSU Banks

The two central agencies that govern money supply in India have acted with alacrity to avoid a run on these banks from depositors.
RBI, Finance Ministry Dismiss Rumours On Closure Of 9 PSU Banks

New Delhi: Reserve Bank of India as well as the Union Finance Ministry have dismissed rumours of nine public sector banks downing their shutters soon.

Describing the reports as wrong, RBI Deputy Governor SS Mundra conceded on Thursday that these banks were indeed under stress owing to bad loans and less capital buffer. RBI is taking prompt corrective measures and working of these banks will soon be brought under PCA or Prompt Corrective Action.

The Finance Ministry, on its part, termed these reports as baseless, ridiculous and far from truth. Both RBI and the ministry assured account holders of these banks that their deposits are safe. They advised account holders to remain alert and act with wisdom.

The nine public sector banks about which rumours are doing rounds are Corporation Bank, UCO Bank, IDBI Bank, Bank of Maharashtra, Andhra Bank, Indian Overseas Bank, Central Bank of India, Dena Bank and United Bank of India. Social media has been buzzing for the past two weeks regarding their imminent closure.

As a result, RBI and Finance Ministry have had to step in to avoid a run on these banks, with panicked account holders otherwise lining up to withdraw their deposits.

The rumours started following merger of State Bank of India-affiliated banks and reports that the Central Government was readying proposals to reduce the number of the remaining public sector banks from 21 to 12. Merger of these banks too have led to fears that deposits of account holders of target banks may come under strain.

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