AP government proposes freezing of bank accounts for 45 days

Hyderabad: With a view to coming out of its present financial crisis, the AP government is likely to freeze all bank accounts across the state for over 45 days. In a report to the state government, the state finance department said about Rs 10,735 crore was parked in the banks under the accounts of various departments including the collectorates. The finance department said the state is borrowing Rs 2,000 crore every month to meet the expenditure, at an interest of 8 to 8.5 per cent.  

The finance department has proposed to freeze all bank accounts over the next 45 days and transfer the balance amount to the PD accounts to be operated by the officer who currently holds the bank account. The finance department said each officer and agency must accordingly have only one PD account. Multiple PD accounts are being integrated with multiple ledgers. The finance department has directed all the departments and collectorates to review the contents of the PD account and take immediate measures to utilise the accounts relating to the financial years before 15 June 2016.

It said there will be no fund transfer from PD ac-count to bank account. The department has asked all heads of department (HoD) and collectors to critically review bank account details of all officials and furnish the details via web portal. The Finance department has ordered that no new bank account should be ope-ned without prior approval of the government.

Alert from RBI: The ministry of programme implementation and monitoring, while comparing the month on month Consumer Price Index (CPI) of states, found that AP has been consistently having higher CPI than of any other state.
RBI has been pointing out that despite a step-up in their money supply, several districts like the north coastal and Godavari districts are experiencing cash shortage.  

District collectors have been complaining of cash shortage even in ATM machines, let alone at beneficiary level. The Finance department said that the bank deposits in general have not been growing, notwithstanding the fact that about Rs 1,000 crore is being disbursed eve-ry month through NTR Bharosa and the Rural employment guarantee scheme.

Info points:

- Rs 10, 735 crore are parked in the bank accounts.

- State government borrows Rs 2,000 every month paying an interest of 8 to 8.5%.

- All departments, including collectorates, should transfer the balance funds into state
government's PD account.

- No new bank account to be opened without prior approval of the state government.