The Kerala government, facing an acute financial crisis, has decided to blacklist banks that refuse to extend funds to it directly or indirectly. This drastic step comes after two public sector banks refused to provide an overdraft of Rs 1,700 crore to two welfare boards, despite the government’s guarantee of fixed deposits.
This is the first time that a bank has denied money to the Kerala government. The government has always maintained its accounts with public sector banks, but in the wake of this incident, it may consider switching to private banks.
The government had intensified efforts to mobilize funds from welfare boards and public sector units after it was left with no resources to meet expenses and fund various projects in the coming months. The short-term deposits will be collected for an additional interest of 0.5 per cent.
Meanwhile, to tide over the present crisis, the government will be drawing a debt of Rs 1,000 crore through the Reserve Bank of India (RBI) on Tuesday. With this, the state will almost exhaust its limit to borrow money in the ongoing financial year.
