Punjab de-empanels HDFC bank: lack of cooperation, failed to implement orders

Indian Express

a day ago

The Punjab government Tuesday de-empanelled the HDFC Bank citing lack of 'cooperation' and failure to 'implement' orders to carry out 'certain time bound transactions'.
In an order issued by the Secretary Expenditure-cum-Director Institutional Finance and Banking, Punjab, the government has asked all the financial commissioners, principal secretaries and administrative secretaries to government of Punjab, heads of the departments of the state government, all divisional commissioners, deputy commissioners and convener of state level bankers committee not to conduct any business with HDFC bank.
'Considering that the HDFC bank has not cooperated with the state government in implementing its order to carry out certain time bound transactions, it has consequently failed to comply… Under such circumstances, it would not be prudent to conduct any government business with the HDFC bank. Accordingly, the HDFC bank is hereby de-empanelled, and the updated list of empanelled banks is enclosed,' reads the order.
The order has listed 23 banks which have been empanelled. These are Central Bank, Punjab Gramin Bank, Canara Bank, Punjab National Bank, Punjab and Sind Bank, State Bank of India, Union Bank of India, Bank of India, UCO Bank, Indian Overseas Bank, Indian Bank, IndusInd Bank, ICICI Bank, Bank of Baroda, Axis Bank Limited, IDBI Bank Limited, Capital Small Finance Bank, AU Small Finance Bank, Punjab State Cooperative Bank, Kotak Mahindra Bank, Yes Bank, Federal Bank and Bank of Maharashtra.The Punjab State Cooperative Bank has been empanelled as a special case.
The move comes days after Punjab government asked various departments to deposit the money, released to them, back in the state's treasury to mitigate the fund crunch.
A few days ago, the Centre had slashed the borrowing limit of the state by Rs 16,676 crore for the current fiscal. This was considered a major setback for the state that has been able to keep afloat only after taking loans.
The state had sought approval for Rs 48,000 crore under the open market borrowing (OMB) limit, but the Centre had imposed a cut of Rs 16,676 crore.
The Department of Expenditure under the Union Ministry of Finance had communicated this to the Reserve Bank of India and informed the state government accordingly.
The deduction was understood to be due to multiple pending liabilities, including unpaid power subsidies of Rs 5,444 crore, power subsidy arrears of Rs 4,107 crore, additional borrowing linked to the power sector of Rs 4,151.60 crore, and borrowings from previous years worth Rs 1,976 crore.
For the first nine months of the financial year, April to December, Punjab had received approval to borrow Rs 21,905 crore against a request for Rs 35,307 crore.
For the entire fiscal, the state had sought a gross borrowing limit of Rs 51,117 crore, which included other borrowing components like negotiated loans from NABARD, SIDBI, and transfers from the state provident fund and public accounts.
On June 5, an emergency meeting of Chief Secretary had discussed the financial situation. All the departments were asked to pay back the released money immediately.