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The Odisha government does not have any view on the “fiscal health” of any particular bank, clarified the State Principal Secretary (Finance)..
This clarification comes after the Reserve Bank of India (RBI) expressed its concern to the State Chief Secretary about the official sending an advisory to State Government Departments, warning them about the financial health of empanelled banks and cautioning against placing deposits with them.
The Principal Secretary, in a letter to all Departments, said: “It is to be clarified that the State government does not have any view on the fiscal health of any particular bank. That comes under the domain of the RBI. There is no reason for anyone to get apprehensive about the financial health of the banks in general.”
According to RBI officials, such advisories on the financial health of banks by a responsible public authority may create unnecessary misgivings among the general public and may have unintended consequences for the stability of the financial system — all the more so, when such advisories are based merely on certain media reports, which sometimes generalise one-off incidents.
It is ironic that while the banks are expected to deploy resources in the State, the communication by the Principal Secretary exhorts the State departments to be circumspect about placing government funds in the banks, they said. Central Bank officials feel the communication from the Principal Secretary has the effect of creating unwanted apprehensions in the minds of the public and inducing them to panic. Hence, the RBI requested the State Chief Secretary to take appropriate action for immediate withdrawal/modification of the communication from the Principal Secretary (Finance).
The Principal Secretary said his communication on “Precaution to be taken when depositing Government funds in banks” of October 21, 2019, was only meant to avoid opening of new accounts by Drawing and Disbursing Offices and shifting of funds meant for welfare and developmental activities of government.
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