Kerala’s Finance department has directed public sector units (PSU) and other State-controlled agencies to park their funds in the State treasury rather than banks if the former is offering a higher rate of interest.
In a December 1, 2023 circular, Rabindra Kumar Agarwal, Principal Secretary (Finance), directed all PSUs, autonomous bodies, State-owned or sponsored agencies to create fixed deposits in the State Treasury using their own funds/profits if the rate of interest there is higher than the “other available options.”
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“The government has noticed that many PSUs/autonomous institutions park a huge amount of money with banks even when the interest rates are lower than that of treasuries. While admitting the right of the institutions to derive maximum benefit from their own deposits, being public money, such investment should fetch maximum returns,” the circular said.
In August 2018, the department had given the aforementioned institutions the option to deposit their own funds either in the treasury or in any scheduled bank of their choice.
