In the absence of clear directions from the RBI, Allahabad Bank pulls out

The savings scheme announced by the West Bengal government in the wake of the Saradha scam, — to protect people from the allure of dubious finance companies offering supernormal returns — has suffered a setback with at least one of the public sector banks refusing to participate in it.

The government had widely publicised its Safe Savings scheme earlier this week, saying that one of its outfits, the West Bengal Infrastructure Development Finance Corporation Ltd., will give forms for the scheme with four PSBs collecting the deposits through their branches. Approved agents of the government’s Small Savings Directorate were also authorised to collect money.

Chief Minister Mamata Banerjee had dubbed the scheme, launched within days of the Saradha scam in April this year, a ‘safe haven’ for investors.

But the Allahabad Bank said its name was included by the WBIDFC without its consent and it would not participate in the scheme.

The bank cautioned people that none of its branches would accept money under this scheme.

Enquiries revealed that Reserve Bank of India regulations do not leave scope for scheduled commercial banks to collect deposits on behalf of a non-banking financial company (in this instance, the WBIDFC).

Sources in the RBI said it was possible that the Mamata Banerjee government was trying to cash in on the image and reliability of the public sector banks.

“Moreover it would also not need to pay commissions to banks for doing this business on its behalf,” the source said.

A senior Allahabad Bank official said that without clear directions from the RBI it would not like to get involved in the business of collecting deposits and routing maturity payments. As per the scheme, deposits in multiples of Rs. 1,000 can be made. The interest rate varies between 9 and 9.25 per cent depending on maturity, which has been capped at five years.

The eastern States, West Bengal in particular, have been a happy hunting ground for fake finance companies that vanish after collecting deposits from a gullible public after offering them high returns.

Of the 87 companies against whom complaints were received by the Union Corporate Affairs Ministry this year, 73 were from West Bengal.