The Central government and the Reserve Bank today said that there was no question of closure of any public sector bank. The decision of the Reserve Bank to initiate a ‘prompt corrective action’ (PCA) against large state-owned lender Bank of India led to rumors that the government may close down some banks.
The RBI in a statement said that it has come across some “misinformed communication” circulating in some section of media, including social media, about the closure of some public sector banks in the wake of their being placed under the PCA.
The government dismissed such rumors 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 recapitalization plan. Do not believe rumors
The central bank had issued a similar clarification in June also. It emphasized that the PCA framework has been in operation since December 2002 and the guidelines issued on April 13, 2017, are only a revised version of the earlier framework.
The RBI said that under its supervisory framework, it uses various measures/tools to maintain the sound financial health of banks. The framework also provides an opportunity to the RBI to pay focused attention to such banks by engaging with the management more closely in those areas.
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