State tightens noose on erring PSU banks

Only PNB, Union Bank and UBI can do business with state PSUs.

Public sector banks that have consistently failed to meet priority sector lending targets and unable to maintain Credit Deposit (CD) ratio as per the Reserve Bank of India (RBI) stipulated norms have finally faced the wrath of the Orissa government.

Frustrated over the lacklustre performance of most of the banks, the state government has decided to stop doing business with them. Only three PSU banks- Punjab National Bank (PNB), United Bank of India and Union Bank have made the grade and have been declared eligible to handle business and deposits of state public sector undertakings (SPSUs) and state level autonomous societies (SLASs) in 2011-12.Orissa finance secretary, Jugal Kishore Mohapatra, in a recent letter to all departmental secretaries, has asked them to inform all SPSUs and SLASs under their administrative control to transact business only with these three public sector lenders.

"On the basis of the revised performance data furnished by the convener, State Level Bankers' Committee in consultation with the regional office of RBI, Punjab National Bank, Union Bank and United Bank of India are eligible to handle the business and deposits of SPSUs and SLASs during 2011-12. Administrative departments are requested to inform all SPSUs and SLASs under their administrative control accordingly”, Mohapatra said in a letter to secretaries of all departments.

In July this year, the state finance department had come out with guidelines for public sector banks for doing business with government PSUs.For the current financial year, only those commercial banks will be eligible to handle the business and deposits of state public sector undertakings (SPSUs) and state level autonomous societies (SLASs) which have maintained CD ratio of at least 55 per cent and achieved priority sector lending of at least 35 per cent during 2010-11.