State-owned commercial banks are expected to garner at least Rs 20,000 crore of additional bulk-deposits from public sector enterprises following an advisory from the finance ministry that government-owned companies should park their surplus cash with state-controlled banks.
These public sector enterprises hold between 10 and 40 per cent of their cash with private banks. This development comes at a time when a few private sector banks are not accepting bulk deposits, which typically attract high interest.
The move by the finance ministry comes at a time when the country's banking system is facing a liquidity crisis with credit to firms drying up. The government has been trying to raise cash with banks which will help them lend to companies.
The 45 listed public sector firms alone have cash and bank deposits of Rs 1,13,500 crore as of March 2008, according to Capitaline data. This excludes unlisted entities like state-owned telecom major BSNL Ltd, Coal India Ltd and Oil India Ltd.
At present, officials of state-run companies say private banks offer interest that is two percentage points higher than the public sector banks offer. Thus, a shift of Rs 20,000 crore away from private banks would mean that the state-run companies will lose at least Rs 400 crore on an annualised basis.
"With public sector companies depositing primarily with state-owned banks the government will get a freer hand in asking the banks to lend. But this affects the interest earnings of the public sector companies," said a Mumbai-based analyst.
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