Some of India's largest state-run companies have complained to officials that government organisations and states are not accepting letters of credit (L/Cs) issued by private banks.

The companies say that government guidelines that recommend the use of state-run banks are having a negative impact on their businesses.

Stakeholder talks

Senior officials in the state-run companies have taken their complaints to the Department of Public Enterprises, which in turn has raised the issue with the Ministry of Finance.

Officials have reportedly said that the Ministry of Finance will hold talks with representatives of the state-run companies and other stakeholders to discuss the matter.

Autonomy compromised

Government guidelines issued in 2008 state that government departments and ministries should conduct their business, as far as possible, through public sector banks.

The state-run companies' position is that this forced use of state-run banks infringes on their autonomy.

One senior executive in a power company told local media that, "if private banks are offering us better term and conditions why should we stick to public sector banks and suffer."

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.