Mumbai - The Reserve Bank of India (RBI) dismissed, as rumours, reports circulating in the media on the closure of certain public sector banks (PSBs) in the wake of their recently being placed under central bank's Prompt Corrective Action (PCA) framework.
The government followed suit in rebutting such reports that have appeared also over social media.
"The Reserve Bank of India has come across some misinformed communication circulating in some sections of the media, including social media, about closure of some public sector banks in the wake of their being placed under the Prompt Corrective Action framework," an RBI release said.
Citing its press release on the matter of June 5, the RBI said: "The Reserve Bank has clarified that the PCA framework is not intended to constrain normal operations of the banks for the general public."
"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," Financial Services Secretary Rajeev Kumar said in a tweet on the issue.
Besides Bank of India, the RBI has initiated similar action against other public sector banks, including IDBI Bank, Indian Overseas Bank and UCO Bank.
Noting that the objective of the PCA is to facilitate the banks to take corrective measures, including those prescribed by the RBI, in a timely manner, in order to restore their financial health, the RBI said: "The PCA framework is, thus, intended to encourage banks to eschew certain riskier activities and focus on conserving capital so that their balance sheets can become stronger.