Bhubaneswar: The Government of Odisha, Finance Department, has reversed its decision to remove HDFC Bank, ICICI Bank, and Axis Bank from the list of empaneled banks authorized to handle business and deposits of State Government organizations.
This new directive, dated July 5, 2025, comes after senior officials from the three banks met with the Chief Minister of Odisha (who also serves as the Finance Minister) on July 1, 2025.
Previously, on June 21, 2025, the Finance Department had removed these banks due to “poor performance in Government Flagship Schemes and unsatisfactory general banking parameters”. However, the banks’ representatives provided a written assurance to improve their performance in Government schemes, Priority Sector Lending, and CD Ratio, and requested their reinstatement.
Consequently, the State Government has decided to withdraw its earlier instruction, allowing HDFC Bank, ICICI Bank, and Axis Bank to continue as empaneled banks. It is important to note that any actions already taken by State Government organizations in pursuance of the previous instruction, such as account closures or deposit withdrawals, will not be undone.
The Finance Department has also indicated that the performance of all empaneled banks, including HDFC, ICICI, and Axis Bank, will be assessed for the 2025-26 fiscal year. Non-performing banks will be removed from the list.
Initially, on June 21, 2025, the Government of Odisha’s Finance Department had removed HDFC Bank, ICICI Bank, and Axis Bank from its list of empaneled banks.
This decision was primarily due to their “poor performance in Government Flagship Schemes and unsatisfactory general banking parameters” over the preceding two financial years. Specifically, their performance in areas such as Priority Sector Lending, Credit-Deposit (CD) Ratio, and various welfare schemes like the Prime Minister’s Employment Generation Programme (PMEGP), PM SVANidhi Yojana, Standup India, housing, education, and export credit was deemed inadequate.
Following this, the state government issued directives to all its departments, directorates, and organizations to immediately close their operational accounts (savings, current) with these three banks and transfer the funds to other empaneled banks. However, existing term deposits were not to be prematurely closed to avoid interest losses; instead, these funds were to be shifted to other approved banks upon maturity.
Reversal of the Decision
On July 1, 2025, senior officials representing the top management of HDFC Bank, ICICI Bank, and Axis Bank met with the Chief Minister of Odisha, who also serves as the Finance Minister. During this meeting, the bank representatives provided written assurances of their commitment to significantly improve their performance in government schemes, Priority Sector Lending, and CD Ratio. They formally requested the State Government to reconsider its decision.
In light of these assurances, the Odisha Government’s Finance Department, on July 5, 2025, reversed its earlier instruction. This means HDFC Bank, ICICI Bank, and Axis Bank are now reinstated and can continue to handle the business and deposits of State Government organizations.
Conditions and Future Outlook
It’s important to note that while the de-empanelment decision has been withdrawn, any actions already taken by State Government organizations in compliance with the previous instruction (such as the closure of accounts or withdrawal of deposits) will not be reversed.
The Finance Department has also emphasized that the performance of all empanelled banks, including the reinstated HDFC, ICICI, and Axis Banks, will be rigorously assessed for the 2025-26 fiscal year. Banks that do not meet the expected performance standards will be removed from the empanelled list. This move underscores the government’s focus on accountability and effective delivery of financial services for its schemes and public funds.
This decision was communicated by Saswata Mishra, Principal Secretary to Government, Finance Department, through an official letter to all relevant government bodies and financial institutions.
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