Don’t Care RBI! Jagan Gets 2300 Crs From Banks

It was the other day that the Reserve Bank of India (RBI) served a warning to Andhra Pradesh on its OverDraft (OD) limit. Seems like, the RBI’s warning has changed nothing, AP government yet again borrowed money from the banks. This time through three corporations, the AP government borrowed Rs 2300 crore.

Apparently from the beginning of this month, the state’s treasury is completely nil and around 40 percent salaries are yet to be paid to the employees. Meanwhile the RBI has warned that if it doesn’t pay the OD by 17th of this month, it would stop all the payments to be made to the state.

With RBI’s warning on OD, the AP government was left with no other option than to borrow money from banks and as usual practice, the corporations have been put forward. Three corporations have been asked to borrow money from Bank of Baroda and Union Bank.

Having borrowed Rs 2300 crore on Tuesday, the state government paid Rs 2000 crore on OD and the rest of the amount for salaries. It is said that to pay full wages to the employees, the state has to go to OD again and that’s an ironic situation. On the other hand, in the form of Wage and Means and Special Drawal Limits, about Rs.2500 crores are still due to RBI.

What’s shocking in this episode is that the banks are acting in the best interest of AP CM Jagan. Previously the RBI has cautioned the banks regarding loans to AP government. The banks were asked to check the financial situations of corporations whether they are in a position to repay and what purpose the money is being used by the corporations.

Yet banks did not adhere to RBI’s precautions and have conveniently sanctioned Rs 2300 crore to AP government.