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M'rashtra orders closure of all accounts in Pvt banks by Mar 31
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SME Times News Bureau | 13 Mar, 2020
Cracking the whip, the Maharashtra government on Friday ordered closing
of all accounts in private and cooperative banks and shifting them to
public sector banks (PSBs).
A notification to this effect was
issued here asking all government departments, state public sector
undertakings and autonomous bodies to comply by the month-end.
The
move came two days after one government department -- National Cyclone
Risk Mitigation Project -- was ordered to close its accounts with Axis
Bank and shift it to the State Bank of India.
The move came a
week after the Yes Bank crisis erupted and it came to light that Rs
1,125 crore of three civic bodies was stuck in the bank.
The
government has directed shifting of all salary, pension and other
accounts to one of the 11 nationalised banks by April 1, as part of the
efforts to ensure safety and security of public funds.
Interestingly,
the move came a day after the Reserve Bank of India had sent an appeal
to all state governments to reconsider any moves to close their accounts
with private banks and shifting them to PSBs.
Justifying the
move, the state has cited two reasons, one being that all Central
government schemes would be processed through nationalised banks.
Ironically, the order also refers to the RBI's directive on October 31, 2019 to switch accounts to nationalised bank.
Banking
sources revealed that there was a virtual flood of deposits coming into
government banks, particularly the SBI, after the RBI moratorium was
slapped on Yes Bank.
The RBI'S letter to states said that such a
move (to shift accounts from private banks to PSBs) could have
implications on banking and financial stability.
"We would like
to point out that the RBI has adequate powers to regulate and supervise
the private banks and by using these powers it has ensured that the
depositor's money is entirely safe," the RBI had said.
It further
sought to allay states' apprehensions by pointing out that the
regulation works in a way to ensure that depositors money is entirely
safe.
"It is precisely to retain depositors' confidence in
private sector banks and mitigate their hardship that after the
imposition of a moratorium on Yes Bank, the RBI has drawn up a draft
scheme without delay and we are making every effort to the finalisation
of the scheme," the central bank said.
It is expected that all
state departments, public corporations, civic bodies and autonomous
bodies will shift their accounts from private banks to PSBs over the
next couple of weeks.
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