REGULATORY · COMPETITIVE · INDIA
Haryana restricts state banking to public sector banks
Economic Times
23 Feb · 5:53 AM
Change
Haryana has ordered all state departments and state-run entities to bank exclusively with public sector banks and has de-empanelled IDFC First Bank and AU Small Finance Bank for government business with immediate effect until further orders.
Why it matters
The circular makes public sector banks the default and limits administrative secretaries’ authority to opening accounts only in nationalised banks operating in the state. Any new or continued use of a private/corporate bank requires prior Finance Department approval, and non-compliant accounts are designated “irregular” and subject to immediate closure. The order explicitly bars parking, depositing, investing, or transacting government funds through IDFC First Bank and AU Small Finance Bank, and directs transfer of balances and closure of existing accounts. The change is effective immediately and remains in force until further orders, creating an open-ended duration for affected banking relationships and cash-management arrangements.
Implications
- • Immediate closure/transfer risk for non-compliant private-bank accounts
- • Finance Dept approval becomes a gating step for private-bank usage
- • PSBs gain exclusive access to Haryana govt operating balances
- • IDFC First/AU SFB lose govt-business fee and float income in Haryana
Who is affected
- • Haryana government departments, boards, corporations and state-run entities
- • Public sector banks operating in Haryana
- • IDFC First Bank
- • AU Small Finance Bank
Source
Read full article on Economic Times →
Topics
Law & Public Safety Regulatory Actions Finance & Banking Banking Regulation Financial Services