Odisha junks advisory after RBI objection

The Odisha government has withdrawn the controversial letter expressing no-confidence in India’s banking sector after a strong objection raised by the RBI.

On October 21, AKK Meena, principal secretary of the finance department, government of Odisha, had issued a notification asking all the departments and state public sector undertakings to withdraw government funds directly from the state treasury through the financial management system (IFMS) and deposit the unspent money back into the treasury instead of parking in bank accounts.

However, the government withdrew the letter following an objection raised by the RBI in a communication to the state chief secretary Asit Kumar Tripathi.

“Further, it is reiterated that withdrawal of money from the treasury without sufficient grounds such as the immediate need for utilisation, matching share for CSS, and depositing the same in bank accounts shall be construed as financial irregularity,” the notification warned. In a clarification, the government said it does not have any view on the fiscal health of any particular bank and its circular was only meant to avoid opening of new accounts and shifting welfare and developmental funds of the government from one bank to other.

“Finance department has empanelled certain banks for transactions based on their performance,” the clarification from Meena said.