UP to break SBI monopoly post strike

Lucknow, Apr 9: After facing major financial crisis due to the week long indefinite State Bank of India (SBI) strike, Uttar Pradesh government is seriously considering to end the bank's monopoly.

The banking behemoth is set to lose government business to its public sector peers and also private banks with the state in principal deciding to end SBI dominance as its major banker.

SBI conducts treasury functions for UP in 66 out of 73 district treasuries and 390 sub-treasuries at sub-division level in 70 districts. In rest of the districts, Allahabad Bank (AB) is the banker of the state government.

The indefinite strike by the SBI officers and staff has caused delay in disbursement of pension and salaries of more than a million state employees, besides disturbing the overall fiscal administration.

According to official sources, the state wants to avoid such situation in future. AB and other private/public sector banks have already approached the UP government in this regard.

Owing to the indefinite strike, UP -- at the beginning of the new fiscal year-- has no clue of its balance with the RBI, whether its account was within 'Ways and Means Advance' limit or was running overdraft.

Being a treasury, deposition of all receipts of the consolidated fund of UP are deposited in SBI and payments by different agencies are also made through the PSU bank.

The RBI has also allowed the UP plea to change the banker from April six.

A finance department official said to bail out UP from the crisis, the RBI has permitted UP to transfer its treasury functions to AB. Presently, AB is performing treasury functions for UP in four districts -- Kaushambi, Kushinagar, Bagpat and Sant Ravi Das Nagar. The official said UP was left with no alternative but change the official banker as salary could not be disbursed to state employees in many districts and state secretariat on time.

Sources said the Chief General Manager of the SBI, in a written communication on April one, had advised UP to take over the treasury functions in view of strike call. The CGM had advised the government to withdraw sufficient cash and store the same in cash chest of district treasuries to avoid crisis in salary disbursement.

The delay by the state government in taking over the treasury function led to the problems in this regard.

Due to the strike, all government receipts, both tax revenue and non tax revenue, are being deposited at the sub treasuries in each district.

Sub treasuries, which were authorised to conduct banking functions like receipt and payments, are flooded with cash due to the strike in all SBI branches in UP.

The state government to cope with the problem of cash was utilising currency to meet its routine expenditure besides distribution of salary of state staff.

UNI