23 October 2019
Bhubaneswar: The Finance Department has warned all Government Departments against parking Government money in banks. With adverse reports about the health of financial institutions coming in, the Finance Department has asked all Department heads to exercise maximum caution while depositing money in banks.
In July this year, the Finance department had empanelled 17 public sector undertaking (PSU) banks, eight private banks, two regional rural banks and one each from small finance bank and cooperative bank for the purpose of doing financial transactions and deposits for State PSUs and State level autonomous societies for 2019-20 financial year.
Finance Secretary, Ashok Meena in a circular to all departments said, media reports have raised doubts about the financial condition of some of these banks. “The Government departments, PSUs or agencies have to be careful while keeping deposits in any banks without proper enquiry about their financial health. It shall be the personal responsibility of the authority concerned for such deposit,” Meena said.
Each of the deposit in a bank, including fixed deposits, is insured up to Rs 1 lakh for both principal and interest amount by the Deposit Insurance and Credit Guarantee Corporation of India Limited (DICGC), a wholly-owned subsidiary of the Reserve Bank of India (RBI).
In case of a default by scheduled commercial or cooperative banks due to liquidation/cancellation of banking license or amalgamation/merger/reconstruction, DICGC will pay up to Rs 1 lakh to each depositor.
“Funds of the Government scheme should be utilised directly from treasury through Integrated Financial Management System without being parked in any bank account. Further, it is reiterated that withdrawal of money from treasury without sufficient ground and depositing the same in the bank account will be construed as financial irregularity,” the circular read.