State-run Oil and Natural Gas Corp (ONGC) is against investing its surplus funds with State-run banks as giving business on nomination basis was causing loss of interest revenue to it, reports PTI.
"ONGC has expressed difficulty with the implementation of the government guidelines relating to investment of their surplus funds," minister of State for petroleum and natural gas Jitin Prasada said in a written reply to the Rajya Sabha.
ONGC has written to the government numerous times saying that State-run banks, on getting assured business, act as a cartel, offering interest rates lower than even that on retail deposits.
"They have mainly pointed out that the process of placing deposits with banks without inviting competitive bids is causing loss of interest revenue," Mr Prasada said.
ONGC, which has a cash surplus of about Rs18,000 crore, is losing Rs200crore-Rs300 crore in interest revenues annually after it was forced to discontinue the practice of calling for competitive rates for parking its cash.
"It has been observed that the rates of interest offered by public sector banks on bulk deposits are less than the rates offered by them on retail deposits for the same period of maturity," ONGC chairman and managing director RS Sharma wrote to petroleum secretary RS Pandey on 3rd September. "The difference in some cases is as high as 225 basis points."
Other State-run companies like Bharat Sanchar Nigam Ltd (BSNL), Bharat Heavy Electricals Ltd (BHEL), NTPC Ltd and Steel Authority of India Ltd (SAIL) have also opposed the bailout of State-run banks at their expense.
Mr Prasada said the finance ministry directive was issued "in order to avoid undesirable competition amongst banks leading to arbitrary hikes in deposit rates, resulting in adverse consequences for the economy".
The government, he said, had asked all State-run units to invest their surplus funds with State-run banks at their published card rates, without inviting competitive bids.
Mr Sharma had, however, stated that the interest rates for bulk deposits offered by State-run lenders vary from bank to bank, with a difference of up to 100 basis points. Some of the State-run banks did not accept deposits on the bulk-deposit card rates published on their websites.
"All these are in defiance of the guidelines of the ministry of finance by State-run banks," he said.
Mr Sharma said private sector banks also sought deposits at their card rates without inviting bids, which "would not be a desirable practice".
ONGC, which had previously written to the government on the subject in July and August, wanted the finance ministry guideline to be scrapped and PSUs to be allowed to call competitive interest rate bids from both PSU banks and private banks.
"The board of the company (ONGC) is required to protect the interest of all the shareholders, including the private and minority shareholders, and maintain highest standard of corporate governance," Mr Sharma said. –Yogesh Sapkale[email protected]