Attempts to trim its functions raise fears

The State government is yet to initiate any step to secure licence from the Reserve Bank of India (RBI) for the Treasury Savings Bank (TSB).

While reiterating its commitment to fortify, modernise, and protect the bank, there have been attempts to trim its functions by transferring the salary of State government employees, disbursal of pensions to service pensioners as well as the funds of Public Sector Undertakings to nationalised banks. This has given rise to apprehension on the future of the bank, which currently holds funds of around Rs.13,000 crore.

Banking sector sources told The Hindu here on Saturday that as the regulator bank had eased the curbs on granting new licences, the government has all authority to apply for a banking licence and explore all options to retain the TSB as its integral source for funding development ventures. The government can try out different options such as holding all the stakes of the bank or sharing 50 per cent with the Union government.

The TSB, which is unique to Kerala, came into being on the strength of a covenant struck between the rulers of the erstwhile State of Travancore and the State government.

The evolution of TSB has been traced back to the Sirkara Savings Bank Scheme introduced in the erstwhile State of Travancore and subsequently in the Travancore-Cochin State and also the Ànchal Savings Bank Scheme run by the former Anchal or Postal Department. On amalgamating the Anchal Department with the Postal Department of the Union government, the Anchal Savings Bank accounts were transferred to the treasuries and they became part of the treasury ledgers in due course. Simplification of banking procedures and revision of interest in 1973 catalysed the growth of the bank. There has been a stable rise in the deposits since then and this has increased the resource position of the government too.

The RBI licence will put to rest rumours of the bank becoming extinct and also lend more credibility to its functioning.

The existence of the bank has become more significant in the event of the financial crisis that the government is trying to battle at present, sources said.