State-run units asked to park surplus funds with banks

November 11th, 2008 - 7:25 pm ICT by IANS  

New Delhi, Nov 11 (IANS) In a bid to infuse additional liquidity into state-run banks, Finance Minister P. Chidambaram Tuesday directed public sector enterprises to ensure at least 60 percent of their surplus funds were parked with these institutions.The directive was issued during a meeting between the finance minister and the chiefs of state-run units to discuss ways to minimise the impact of global financial crisis on the Indian economy and address the liquidity problem in the country.

Chidambaram also asked these state-run units not to ask commercial banks for additional interest while parking the funds, said senior officials in the government who attended the meeting at North Block, the office of the finance ministry.

But not all the chief executives of state-run firms, which have surplus funds to the tune of Rs.100,000 crore (Rs.1,000 billion) were happy with the directive.

“We have a surplus of 25,000 crore (Rs.250 billion),” said R.S. Sharma, the chairman of the Oil and Natural Gas Corp, while adding that he anticipated a loss of Rs.3-Rs.4 billion on account of the government’s instructions.

Earlier this year, the finance ministry had issued instructions to state-run enterprises to park 60 percent of their funds with government-run commercial banks. But such banks had complained that the directions were not being followed.

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