Chidambaram: Strict

New Delhi, Nov. 11: Finance minister P. Chidambaram today asked public sector companies to park 60 per cent of their surplus funds with state-run banks.

Policy dictates that public sector undertakings park their surplus funds with state-run banks, but most PSUs go for private banks, which offer higher rates of interest.

Officials said some PSUs even invite bids from banks despite the ministry’s directive barring such a practice.

Many PSUs invite bids for their short-term deposits, too. Private banks often undercut state-run rivals in these bidding by over 1 per cent.

R.S. Pandey, secretary in the oil ministry, said state-run firms should not ask banks for higher interest rates on their bulk deposits.

The finance ministry had issued a directive in January this year asking all PSUs to park 60 per cent of their funds with state-run banks.

“All PSUs and government departments should comply with the directive, failing which the government may be forced to take disciplinary action,” a finance ministry official said.

An assurance of bulk deposits will help PSU banks improve their capital risk profile.