Yes Bank effect: tread cautiously, says Maharashtra government

March 11, 2020

In the wake of the collapse of Yes Bank, the Maharashtra government has directed all its departments, civic bodies and semi-government corporations to not transact with private banks for the time being, and focus only on nationalised banks.

Minister of State for Finance, Shambhuraje Desai, told The Hindu, the administration is being given clear directions in this regard. “Finance Minister Ajit Pawar and I held a meeting with senior officials, including the Chief Secretary and finance secretary after the Yes Bank episode. We discussed the situation and have given directions to the administration,” he said.

The Minister said no new transaction will be initiated with a private bank for the time being. “Government departments, semi-government corporations and civic bodies have independent accounts. Many in the State had already opened accounts with Yes Bank and are facing problems now. We do not want government money to be stuck and have therefore ordered the departments and corporations to go ahead with new transactions with nationalised banks only,” said Mr. Desai.

According to sources in the Finance Department, the Yes Bank episode may impact the Mahatma Phule Crop Loan waiver scheme as a few cooperatives had their deposits with the bank.

The Pimpri-Chinchwad Municipal Corporation, the Mumbai and Thane fire brigades too had their accounts with the bank, apart from the City and Industrial Development Corporation’s home loan account, and the Maharashtra State Electricity Distribution Company Limited.

A senior official from the Co-operation Department, which is executing the crop loan waiver scheme, said the issue is likely to be discussed in Wednesday’s Cabinet meeting.

“We have not received any serious complaints as of now, but will be monitoring the situation and if needed, steps will be taken accordingly,”

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Source : www.thehindu.com