Madhya Pradesh Government Puts Restrictions On Depositing Funds In Private Banks

Bhopal (Madhya Pradesh): The finance department has issued an order preventing the civic bodies, corporations, boards, universities, public sector undertakings and other government organisations from depositing government funds in private banks. In the order, the finance department said the government funds should be deposited in public sector, regional cooperative, and Grameen banks.

Nevertheless, Citizens’ Cooperative Banks have not been put under this category. According to the directive, the accounts already opened in private banks should be transferred before April 30. The order further says if they want to do FD of any amount, 50% of it should be deposited in public sector, cooperative and regional, and Grameen banks.

If any amount of funds remains, it can be deposited in private banks whose interest rates on FD should be more than the public sector banks. The government organisations should also keep it in mind that if a loan is taken on the interest of the deposited amount, it should be more than interest to be given.

The government organisations cannot deposit funds in non-banking financial companies and mutual funds. Before depositing government funds in the banks, proposals should be brought from them. Afterwards, funds should be deposited only on higher interest rates. According to sources, several government organisations were depositing funds in the private banks. The finance department issued the order to stop this practice.