Maharashtra govt to shift accounts from private to PSU banks, ICICI Bank among losers

Thackeray govt asks all its departments to shift from cooperative and private banks to nationalised ones, disregarding RBI’s advice this week.

File photo of Shiv Sena leader Uddhav Thackeray | PTI Photo

Mumbai: The Uddhav Thackeray-led Maha Vikas Aghadi government has mandated all its departments to shift their accounts from private to state-run banks, in a move that seemingly disregards the Reserve Bank of India (RBI)’s recommendation.

Deputy Chief Minister Ajit Pawar-led finance ministry issued the order Friday. It will come into effect from 1 April.

According to the order, all departments will have to close their accounts in cooperative and private banks, and open new ones with nationalised banks.

These include salary accounts, grants and other financials of government departments, sub-departments, civic bodies and the various financial corporations of the Maharashtra government.

ICICI Bank, in which the Brihanmumbai Municipal Corporation holds deposits worth Rs 329 crore, will be among the losers.

The move comes days after the RBI wrote to all state governments not to transfer their deposits out of private sector banks, citing misplaced apprehensions about the safety of deposits with private lenders.

How it will be done

The Maharashtra finance department has intimated the heads of all the bodies under it to implement the orders immediately.

Sources in the government revealed that the State Bank of India (SBI) is the preferred choice for the Shiv Sena, NCP and the Congress.

The other banks which will get the government accounts include Syndicate Bank, Bank of Baroda, Corporation Bank, Bank of Maharashtra, Bank of India, Punjab National Bank, Central Bank of India, Andhra bank, Union Bank of India and the Indian Overseas Bank, said the sources.

According to the plan, the SBI will initially disburse the salaries and pension of the state government employees. Opening accounts with the other nationalised banks will follow suit depending on the preference of the department.

Presently, the salaries and pension of the state government employees are being disbursed through private, cooperative and nationalised banks.

The decision has come after a directive from the Narendra Modi government made it compulsory for all state governments to disburse salaries, pensions and grants only through nationalised banks.

The RBI too has laid down strict regulations for financial dealings of state governments through private banks, said sources in the finance department.

In line with past actions

The Maharashtra government’s latest decision is only the latest in a series of similar moves.

In December 2019, Chief Minister Uddhav Thackeray moved the salary accounts and other grants of the police department out of the Axis Bank to the State Bank of India following a war of words between the Shiv Sena and Amruta Fadnavis, wife of former CM Devendra Fadnavis and a senior executive with Axis Bank. An estimated two lakh accounts worth over Rs 11,000 crore were moved out.

In the same month, the Thane Municipal Corporation also shifted its salary accounts from Axis Bank to SBI.

This month, the Brihanmumbai Municipal Corporation (BMC) — the richest civic body in the country — decided to move its accounts from various private banks to SBI.

In January 2020, the BMC had opened new accounts in nine banks — private, cooperative and nationalised — for deposits worth Rs 6,300 crore.

With the new order in place now, the BMC has to act fast to shift these accounts, said the sources.