The Reserve Bank authorisation to open up the Central/State Government business to ‘all private sector banks' has triggered intense lobbying locally.
YES Bank, which launched its Thiruvananthapuram branch here on Friday, lost no time in advertising its intent to no less a person than the State Finance Minister, Mr K.M. Mani, who was the chief guest at the ceremony.
YES BANK BID
Later, speaking to newspersons, Mr R. Ravichander, Group President, YES Bank, hoped to work with the State Government by getting to manage some of its business.
The same evening, it was left to the Finance Minister himself to be confronted with fervent pleas from South Indian Bank, a leading home-grown player, to being granted the privilege to work with the State Government.
The occasion was the re-launch of the Regional Office of the bank from the new premises on the arterial M.G. Road in Thiruvananthapuram.
The request was made to the Finance Minister, once again the chief guest of the event, by Mr Abraham Thariyan, Executive Director, in his welcome address.
SIB EXPOSURE
Thiruvananthapuram constituted one of the biggest regions for the bank nationally, Mr Thariyan said, adding that the bank has an exposure to the tune of Rs 1,000 crore in various Government-owned projects including Technopark, Kerala Industrial Infrastructure Development Corporation (Kinfra), Kerala Financial Corporation and the up-and-coming Vizhinjam international port and container transhipment terminal.
In his inaugural address, the Finance Minister replied that the State Treasury may not have the funds to commit as deposits but the bank was most welcome to invest in a slew of mega-sized projects launched by the State Government.
GOVT PROJECTS
These included the Rs 1 lakh-plus crore high speed railway linking Thiruvananthapuram with Mangalore; the Kochi Metro Rail; the Vizhinjam port; and the Kannur international airport, among others.
The demand for the State Government business from private banks has been generated in the context of the RBI announcing deregulation of sorts in the sector.
The enabling order, dated January 31, recalled that currently all public sector banks were eligible to conduct the Government business as agents of the RBI.
However, only three private sector banks, viz. ICICI Bank, HDFC Bank and Axis Bank, were appointed to carry out limited general banking business of the Central Government and of those State Governments which had entered into an agreement with the RBI for the purpose.
RBI ORDER
But the RBI has been receiving formal/informal requests from various Central Government Ministries/Departments, State Governments and from the banks themselves for granting authorisation for additional/fresh business to these/other private sector banks for conducting Government business.
The existing policy was reviewed and it has been decided that all private sector banks will now be considered eligible to handle any Central/State Government business (where the RBI pays agency commission) at par with public sector banks, the RBI had said.
This would help enhance the quality of customer service in Government business through more competition, improve customer convenience by increasing the number of customer service outlets and broad-based revenue collection and payments mechanism of Governments, it had added.