Kerala govt to blacklist banks refusing funds
This is the first time the State government is being denied money by any bank.
This is the first time the State government is being denied money by any bank.
This is the first time the State government is being denied money by any bank.
Thiruvananthapuram: The Kerala government, reeling under an acute financial crisis, has decided to blacklist banks which refuse to extend funds to it directly or indirectly.
The stringent action comes in the wake of two public sector banks upsetting its efforts to raise Rs 1,700 crore through two welfare boards to meet its financial requirements for the coming months.
The government had sought Rs 1,200 crore from the Motor Vehicle Workers Welfare Board and Rs 500 crore from the Toddy Tapping Workers Welfare Board to tide over the crisis experienced after the Onam festival.
As part of collecting this amount, these boards approached two public sector banks and sought the money as an overdraft on the guarantee of their fixed deposits. The banks, which had initially responded positively made a U-turn upsetting its plans.
Incidentally, this is the first time the State government is being denied money by any bank. Despite being approached by private sector banks with a flurry of offers, the government continued to maintain all its accounts with public sector banks till now. The finance department may switch to private banks after the banks hindered its efforts to raise Rs 1,700 crore.
The government had intensified efforts to mobilize the funds from welfare boards and public sector units after it was left with no resources to meet expenses and fund various projects in the coming months. The short-term deposits will be collected for an additional interest of 0.5 per cent.
Meanwhile, to tide over the present crisis, the Government will be drawing a debt of Rs 1,000 crore through the Reserve Bank of India (RBI) on Tuesday. With this, the state will almost exhaust its limit to borrow money in the ongoing financial year.