The state government has decided not to allocate government business to private sector banks in the light of recent guidelines of the Reserve Bank of India (RBI).
"The RBI has asked us not to allocate government business to private sector banks. Accordingly, we have instructed all department secretaries not to authorise such banks to handle transactions of state agencies and PSUs under their administrative control", said an official at state finance department.
For the time being, the Odisha government will ensure that private banks do not handle its business till receipt of further direction from the RBI, he added.
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It may be noted that the RBI has barred private sector banks from transacting any government or agency business. The agency business includes collection of direct and indirect taxes, disbursement of central government pensions and expenditure related payments of the state and central government.
"The Government of India has recently reviewed the matter and advised us that the restriction on allowing further authorization of government business to private sector banks will continue. Accordingly, there should not be any further allocation of government business to private sector banks", V Rangal Rao, general manager (banking), RBI said in a letter to R Balakrishnan, additional chief secretary (finance), Odisha.
In Odisha, only four private sector lenders- private sector lenders- ICICI Bank, Axis Bank and HDFC Bank, Karnataka Bank are empanelled to transact government business. Apart from private sector banks, 14 PSU lenders, two regional rural banks (RRBs) and the Odisha State Cooperative Bank have been chosen to handle deposits and business of the state PSUs and state level autonomous societies.
The banks have been chosen on the basis of their performance across eight areas- CD (credit deposit) ratio, achievement under annual credit plan (ACP), branch network, ratio of rural branches network to total branches, percentage of priority sector advances to total advances, achievement under Pradhan Mantri Rozgar Yojana (PMRY) scheme and progress under Pradhan Mantri Jan Dhan Yojana that includes deposit accounts opened and made operational on the CBS (core banking solutions) platform.
