The Odisha government on Saturday withdrew its decision to remove three private sector banks from the list of empanelled banks, that handle government businesses and deposits, following their “written assurance” to improve performance.
On June 21, the state government removed three private banks — HDFC Bank, ICICI Bank and Axis Bank — from the state’s list of banks empanelled, due to their poor performance in government flagship schemes and unsatisfactory general banking parameters.
The decision to withdraw the June 21 order comes after a meeting of Chief Minister Mohan Charan Majhi, who also handles the finance portfolio, with senior officials of the three banks on July 1. The officials requested the government not to remove them from the list of empanelled banks.
“The bank officials submitted written assurance to improve their performance under government schemes and also to improve their performance in priority sector lending (PSL), credit-to-deposit (CD) ratio and other issues,” said a circular issued by Odisha finance secretary Saswat Mishra.
These three private banks will now continue as empanelled banks eligible to handle businesses and deposits of state government organisations, said the order.
The government has several times pulled up private banks for their low share in extending the government’s financial schemes for groups like farmers, businesses and street vendors. The state governments often perceive that private banks primarily serve the affluent segments of society — those less likely to default and more likely to maintain substantial deposits.
