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

In a significant and unprecedented move, the Odisha government has decided to remove three major private sector banks—HDFC Bank, ICICI Bank, and Axis Bank—from its panel of approved financial institutions. This decision comes 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.

According to sources within the Finance Department, the Odisha 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 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 has also been found lacking. Consequently, the government has decided to adopt a tougher stance. A formal circular has been issued 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 three banks.

The instructions explicitly mention the following actions:

Immediate removal of HDFC Bank, ICICI Bank, and Axis Bank from the approved list (panel) of banks that are eligible to handle government deposits and business transactions.

No further deposits or transfers of government money should be made into accounts maintained at these banks.

All existing accounts—whether savings, current, or other categories—held by any government-affiliated body with these three banks should be closed immediately.

This move indicates the Odisha government’s resolve to ensure better accountability and efficiency in financial partnerships, especially those dealing with public funds and service delivery. By excluding these banks, the government also sends a strong signal to other banking institutions about the importance of aligning with the state’s goals for development and transparency.

The Finance Department’s communication makes it clear that going forward, only those banks that demonstrate strong operational performance and active support in the implementation of welfare schemes will be allowed to manage government business. This policy shift is expected to encourage better competition and efficiency among financial institutions operating within the state.