Rs 200 cr jolt for Allahabad Bank

Shortly after Allahabad Bank got a new chairman & managing director Avinash Chandra Mahajan this month, its Agra operations have suffered a major jolt as it has come close to losing its largest and one of the oldest clients, worth almost Rs 200 crore, to other nationalised banks.

On Thursday, Dr B R Ambedkar University of Agra broke its 40-year-old association with Allahabad Bank and shifted one of its accounts worth Rs 28.90 crore to Syndicate Bank while it prepared to shift the rest of its accounts worth about Rs 120 crore to other banks, pending some formalities, creating a rush among bankers of the town to capture one of the biggest accounts of the town.

In this, Syndicate Bank is ahead of the rest, having offered 8.5 per cent rate of interest on fixed deposits and 7.5 per cent of "Flexi savings accounts" to the University.

Talking to Business Standard, A Q Ansari, the university finance officer, said the university had been operating all its accounts at Allahabad Bank and the annual transactions of the university with the bank were almost Rs 200 crore, while the university's cash worth about Rs 120 crore was always lying with the bank.

He said over the past few years, it was being noted that the rate of interest being offered by Allahabad Bank on the university deposits, which were mostly in the form of Fixed Deposits, was too low with the bank sticking at a maximum of 6.25 percent interest for the FD accounts despite several reminders from the University to raise this percentage to a more rational level considering the huge amounts of cash lying dormant with the bank. The level of services provided by the bank was also not found satisfactory.

He said when the Allahabad bank refused to pay heed to the University's requests, it was thought as prudent to shift the university account to some other bank, which offered a better deal in which, the Syndicate Bank has currently made the highest offer of 8.5 percent interest on FD accounts and 7.5 percent interest on "Flexi savings accounts", after which, the first installment of Rs. 22.90 crores was transferred to the Syndicate Bank as fixed deposit while another 6 crores was deposited in the "Flexi account". The rest of the accounts shall be shifted soon, he added.

Notably, apart from handling the banking transactions of the University, Allahabad bank also handles the sale of University admission forms at its different branches throughout the country, earning a handsome commission on the form sales.

Besides, the saving accounts of the University employees are also with the Allahabad Bank currently, which could also be shifted to the new bankers, once the University shifted its salary account from Allahabad Bank giving a big jolt to the bank.