HDFC, ICICI, Axis de-empanelment: Odisha govt issues clarification

The Odisha government issued a clarification on Tuesday regarding the removal of HDFC Bank, ICICI Bank and Axis Bank from list of banks empanelled for handling business and deposits of State government organisations.

Also Read: Odisha government cracks down on private banks; HDFC, ICICI, and Axis removed from official panel

“In this connection, it is hereby clarified that instructions communicated to all Departments vide the above-referred letter shall not be applicable in case of SNA Bank accounts, payment aggregator/payment gateway bank accounts, Agency bank accounts (for collection of State Government dues) and NPS/Pension trustee bank accounts currently maintained in HDFC Bank, ICICI Bank and Axis Bank,” a Finance Department notification read.

While the above-mentioned bank accounts of the State government organisations shall continue in these three banks, new accounts for these purposes shall not be opened in these three banks till further order, the official communiqué clarified.

Worth mentioning, in a significant and unprecedented move, the Odisha government earlier decided to remove three major private sector banks—HDFC Bank, ICICI Bank, and Axis Bank—from its panel of approved financial institutions. This decision came in the wake of alleged subpar performance in implementing various government schemes over the past two years and their continued failure to meet essential banking standards.

The State government had been closely monitoring the involvement and efficiency of these banks in executing state-sponsored welfare programs and development initiatives. Despite repeated expectations and reminders, these institutions had reportedly failed to show meaningful improvement in their outreach, efficiency, and overall performance related to public service delivery.

Not just in terms of scheme implementation, but their performance on other key banking benchmarks had also been found lacking.

Consequently, the government decided to adopt a tougher stance. A formal circular was issued on June 22 by the Finance Department to all state departments, directorates, major offices, agencies, government-run institutions, public sector undertakings (PSUs), societies, and universities, directing them to cease all business operations with these banks.