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‘Nationalised’ clause cost regional rural banks dearly

Lose government deposits running into crores

The term ‘nationalised’ has been haunting the Regional Rural Banks (RRB), literally!

Usually, authorities of various government departments deposits funds in banks and there are clear instructions for them to deposit these amounts in nationalised banks. For most of the officials, nationalised banks refer to those banks that were nationalised by the late Prime Minister Indira Gandhi, decades ago. The Govt. of India had nationalised as many as 14 large banks by issuing an Ordinance ‘Banking Companies (Acquisition and Transfer of Undertakings) Ordinance 1969.’ Six more banks were nationalised in 1980. On the other hand, the RRBs were established later to cater to the needs of rural areas. In these, the Union government has 50% share followed by the State government’s 35% , sponsor bank has 15% and they implement 20% of the district credit plan, according to an RRB official.

The problem being faced by RRBs is they are not being treated on par with nationalised banks by the officials and hence deposits, running into crores of rupees, were not being given to RRB branches.

“Often, officials reject our request to park their funds in our banks stating that they are helpless due to the clause ‘nationalised’. The problem is that they were private banks which were nationalised by Indira Gandhi. Whereas we are the banks born in govt. sector and there is no chance of nationalisation. We do not know how to convince the officials that we are already a government bank and hence eligible for getting deposits from government departments. We wish to write to the Reserve Bank of India (RBI) to change the clause to government banks instead of nationalised banks, which was in use since 1969,” said Mallempati Ravi, Regional Manager, Andhra Pradesh Grameena Vikas Bank.

(Source: The Hindu)

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