There are increasing number of messages on WhatsApp and other social media platforms informing people about closure of nine banks. However, these are baseless, untrue and all depositors’ money is safe, according to Finance Ministry and the Reserve Bank of India (RBI).
Since last few weeks, Whatsapp Groups have seen a barrage of messages claiming closure of nine public sector banks — 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.
The Finance Ministry has confirmed that the reports of the PSBs shutting down are “ridiculous, baseless and incorrect”.
At present, these banks are weak with respect to their increased bad loans and low capital buffer because of which they are put under prompt corrective action (PCA) by the banking regulator RBI.
Urging all to not fall prey to falsehoods on the future of these weak banks, RBI Deputy Governor SS Mundra on July 14 said the lenders’ inclusion under PCA is for timely improvement of their performance.
“PCA is one among such tools which involves monitoring of performance indicators of banks as an early-warning exercise and is initiated once such thresholds as relating to capital, asset quality are breached,” Mundra had said at a banking event.
However, stating that the PCA is akin to taking an injured athlete to bed rest, he said, “By no means does the framework suggest that the bank would cease to carry out normal banking operations, including lending, as is being mischievously suggested.”
The RBI deputy governor expressed strong displeasure on social media messages spreading false information about the future of some of the nine banks under the PCA framework and urged everybody to “apply the mind” while reading those.
“Its objective is to facilitate the banks to take corrective measures, including those prescribed by the RBI in a timely manner in order to restore the thresholds or financial strength,” Mundra added.
The PCA framework has been in existence since December 2002 and the guidelines were last reviewed in April this year to make it contemporary.