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Fact check: Social media rumours of 9 banks shutting down false

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New Delhi, Sep 25: The Reserve of India has dismissed rumours of the government closing certain commercial banks as false. The development comes after the RBI imposed sanctions on Punjab and Maharashtra Cooperative (PMC) Bank for alleged irregularities.

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The central bank in a tweet said, "Reports appearing in some sections of social media about RBI closing down certain commercial banks are false."

Reacting to the rumours, Finance Secretary Rajeev Kumar said, "There are mischievous rumours on social media about RBI closing some banks. No question of closing any public sector bank, which are articles of faith. Rather govt is strengthening PSBs with reforms and infusion of capital to better serve its customers."

Panic amongst account holders after RBI imposes restrictions on PMC Bank

There have been rumours on social media of government closing down state-run banks after RBI placed Bank of India under 'prompt corrective action' (PCA), which stops it from certain lending till it recovers health.

Several Twitter posts said that nine banks will be closed permanently by the RBI, namely the Corporation Bank, IDBI, Bank of Maharashtra, UCO Bank, Andhra Bank, Indian Overseas Bank, Central Bank of India, Dena Bank and United Bank of India.

The RBI, on September 23, issued an order under subsection 1 of Section 35-A of the Banking Regulation Act (BRA), 1949 which allows the Central Bank to impose limitations on banks suspected of flouting norms.

Last month, the government had announced that 10 public sector banks would be merged into four. Oriental Bank of Commerce and United Bank of India will be merged with Punjab National Bank, while Syndicate Bank will become part of Canara Bank.

Andhra Bank and Corporation Bank will be merged with Union Bank of India, and Allahabad Bank with Indian Bank. The government has already merged Dena Bank and Vijaya Bank with Bank of Baroda. Also, the IDBI Bank was taken over the public sector insurance behemoth LIC.

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