10 hours ago
Odisha removes HDFC Bank, ICICI Bank, and Axis Bank as authorised banks for govt businesses
Odisha government issued an official directive removing
HDFC Bank
,
ICICI Bank
, and
Axis Bank
from the list of empanelled banks authorised to handle the business and deposits of the State Government and its supported organisations. The letter reviewed by ET said that their action on banks is due to 'persisting poor performance' in some flagship government schemes over the last two financial years.
The letter signed by the Principal Secretary to the Government, Saswata Mishra, stated the decision was also due to 'discouraging general banking parameters' by these three banks without elaborating it further.
The letter also stated that if the performance of these three banks improves during the current financial year, the state government may consider including them in the list of empanelled banks.
ICICI Bank, HDFC Bank and Axis Bank did not respond to requests for comments.
Odisha's share of total deposits is Rs 5.64 lakh crore or 2.4% as on March 31, 2025. 'This will not impact the banks' performance given the small share of the state in total deposits although it may affect their reputation if it is not mended soon,' said an analyst.
The state government also warned that other poorly performing banks could face a similar fate.
'Depending on performance (achievement in flagship government schemes and general banking performance parameters such as CDR, ACP achievement, etc.), poorly performing banks shall be removed from the empanelled list of banks and well-performing banks will be added to the empanelled list.' CDR stands for credit deposit ratio and ACP is an annual credit plan.
The state government's letter dated June 21 stated that State Government departments, directorates, heads of departments, establishments, agencies, PSUs, societies, universities, and other affiliated organisations must immediately close their savings, current, and other running accounts with these three banks and transfer the balances to other empanelled banks.
The letter stated that term deposits currently held in these banks should not be prematurely closed to avoid loss of interest. Upon maturity, these deposits must be transferred to other empanelled banks.
Banks in Odisha state attracted term deposits of Rs 3.21 lakh crore as of March 31, 2025, according to data published by the RBI. While this is lower than Kerala (Rs 3.48 lakh crore), it is higher than Andhra Pradesh (Rs 2.44 lakh crore).
