Telangana Government to close accounts with high NPA banks

Hyderabad: The State Government has decided to cancel the government accounts maintained by various departments with the banks which have high NPAs.

The officials of the State Finance department said that the government issued revised guidelines and conditions pertaining to operation of bank accounts and placement of government funds as fixed deposits with various banks in view of the deregulation of the banking sector and new schemes that have been initiated by the government recently.

As per the guidelines, the Bank should not be involved in misappropriation/ misuse/ interruption in banking transactions of the State Government. It is also mandatory to check the NPAs of the bank, net profits and examine the published audited results to operate accounts and open fixed deposits. Officials said that the primary condition for empanelment shall be that the bank should reach at least 50 per cent of the lending target for programmes sponsored by the government as per the State Annual Credit Plan of the State Government during the previous financial years.

The performance of the banks will be assessed by a screening committee appointed by the Government in coordination with the State Level Bankers Committee.

The performance of individual bank branches at the district level will be reviewed by the district level committee headed by the District Collector. However, the state level screening committee will take a final decision based on the merits of the case and circumstances.

The authorities said that the banking institution, a Public or Private Scheduled Bank, Regional Rural Banks and Cooperative Bank excluding Urban Cooperative Banks, the net worth shall be a minimum of Rs 1,000 crore to open bank accounts by the state wings. The period of empanelment of a bank will be three years. The Minimum Capital Adequacy Ratio (CAR) at Bank Level and CD Ratio in state level should be maintained by the Bank, as prescribed by the Reserve Bank of India .

Officials said that orders were issued instructing the authorities not to open more than three bank accounts under fixed deposit, current account and saving accounts. Earlier, the departments have been given freedom to open bank accounts at their wish and parked money in different accounts.