AIBOC CIRCULAR NO. 99 DATED 02.11.2011

AIBOC issued its circular No. 99 dated 02.11.2011 on allocation of Govt. business to new generation private sector banks. We are reproducing the same here for our readers.

CIRCULAR NO.99                                 DATE: 02.11.2011

TO ALL AFFILIATES /MEMBERS:

ALLOCATION OF GOVERNMENT BUSINESS TO NEW GENERATION PRIVATE SECTOR BANKS DIRECTIVES OF THE CENTRAL GOVERNMENT

We have to-day sent a communication to the Ministry of Finance, Government of India on the above subject. The issue was being tackled by the Confederation since a long time. The current development is alarming and hence we have sought reversal of the directives of the Government keeping in view the social responsibility that as is being discharged by the Public Sector Banks as well as the Old Generation Private Sector Banks.  A coy of the communication is enclosed.

All our affiliates/State Units and members are requested to await further developments in the matter.

With greetings,

Sd/-

(G.D. NADAF)

GENERAL SECRETARY

To,

Sri. Pranab Kumar Mukherjee

Hon’ble Finance Minister,

Government of India,

South Block, Parliament House,

New Delhi.

Respected Sir,

ALLOCATION OF GOVERNMENT BUSINESS TO NEW GENERATION PRIVATE SECTOR BANKS - DIRECTIVES OF THE CENTRAL GOVERNMENT UNDER - OFFICE MEMORANDUM NO.LS- 11012/S(I)BANK/ REF.CARE/2010/RBD/2056-2135 DATED 07.03.2011 OF DEPARTMENT OF EXPENDITURE, MINISTRY OF FINANCE, GOVERNMENT OF INDIA

We have been strongly advocating against the move on part of the Government of India, to allocate Business of the Central Government as well as the State Governments to the New Generation Private Sector Banks; keeping in view the fact that, they are not discharging their social responsibilities as is being done by the Public Sector Banks as well as the Old Generation Private Sector Banks. They will utilise this opportunity, only towards garnering huge funds and deposits from the Government Departments, while dealing with the business allocated to them by the various departments both at State as well as the Central Government.

The Public Sector Banks as well as the Old Generation Private Sector Banks have been undertaking the responsibility of ensuring implementation of the various Government sponsored schemes, financial inclusion and social banking religiously. Apart from the age-old commitment, they have been lending to priority sector, maintenance of healthy credit deposit ratio in various States, to ensure a balanced growth of all the States with a special emphasis in respect of the rural interior parts as well as backward areas of the country. The Government business is in a way an incentive to these Banks who are committed to the socio-economic policies of the Government.

The foreign investors control these Banks. The money they garnered from the Government business will be used to earn more profits without discharging their social responsibilities.

We were informed by our Kerala State Unit that, the Government of Kerala has issued an abstract under G.O. (Rt) No. 7013/2011/Fin. dated 15.09.2011, certain instructions to the Health Department, ostensibly quoting the communication issued by your Department and has directed three Private Sectors Banks namely ICICI Bank, HDFC Bank and Axis Bank for meeting their Banking requirements.

We strongly feel that these directives issued by the Govt. of Kerala on the basis of the communication issued by your Department will affect the interest of the PSU Banks as well as the Old Generation Private Sector Banks.

We therefore, request you to kindly re-examine the matter afresh and rescind the communication issued.

Please treat the matter as very urgent.

With greetings,

Yours faithfully,

Sd/-

(G.D. NADAF)

GENERAL SECRETARY