Oil and Natural Gas Corporation (ONGC) has protested the Finance Ministry directive of parking surplus funds with only the PSU banks saying the state-run banks on getting assured business act in cartel offering interest rates lower then even retail deposits.
ONGC, which has a cash surplus of about Rs 18,000 crore, is losing Rs 200-300 crore in interest revenues annually after it was forced to discontinue the practice of calling competitive rates for parking its cash.
"It has been observed that the rates of interest offered by public sector banks on bulk deposits are less than the rates offered by them on retail deposits for the same period of maturity," ONGC Chairman and Managing Director R S Sharma wrote to Petroleum Secretary R S Pandey on September 3.
"The difference in some cases is as high as 225 basis points.
Sharma said the guidelines of the Ministry Finance dated December 1, 2008 advised uniformity of card rates for bulk deposits for different maturities across public sector banks.
"However, the interest rates for bulk deposits offered by PSBs vary from bank to bank with a difference of up to 100 bps," he said, adding some of the PSBs did not accept deposits on the bulk deposit card rates published on their websites.
"All these are in defiance to the guidelines of the Ministry of Finance by public sector banks (PSBs)," he said.
Sharma said private sector banks were also representing to the company to place deposits with them at their card rates without inviting competitive bids, "which would not be a desirable practice".
ONGC, which had previously written to the government on the subject in July and August, wanted the finance ministry guideline to be scrapped and PSUs be allowed to call competitive interest rate bids from both PSBs and private sector banks.
"The board of the company (ONGC) is required to protect the interest of all the shareholders, including the private and minority shareholders, and maintain highest standard of corporate governance," he added.
