Maha govt asks depts to shift accounts to nationalised banks
In the wake of reports of such moves being mulled bysome states, the Reserve Bank had on Thursday written to stategovernments not to shift away from private sector lenders,flagging its concerns on financial stability.
The fiasco at Yes Bank, a private sector lender, hasled some state governments to think on these lines.
"All the government offices, public undertakings,corporations are advised to ensure that all their banking-related businesses should be undertaken with nationalisedbanks itself," a government resolution from the FinanceDepartment said.
It added that all the accounts opened with private orcooperative banks for holding any money for governmentschemes, excluding for salaries and allowances, should be shutby April 1.
Giving out a list of 11 nationalised banks, it askedofficials to ensure that employees' salaries and allowancesare paid only through the state-run lenders from April.
It also appealed to pensioners to shift their accountsto the nationalised banks and gave out a list of 13 banks withwhich the state government has an arrangement.
The GR also asks corporations and undertakings toensure that their investments are made with the nationalisedbanks itself.
"We strongly believe that such a move can have bankingand financial sector stability implications. We would like topoint out that the RBI has adequate powers to regulate andsupervise the private sector banks and by using these powersit has ensured that the depositors' money is entirely safe,"the RBI had reportedly said in the letter to all the chiefsecretaries.
"...apprehension on safety of deposits in privatesector banks is highly misplaced and..such reactive decisionwill not be in the interest of stability of financial systemin general and banking system in particular," it had added. AANP NP