Companies requested not to transfer their own funds to financial banks

The United Democratic Front’s Kozhikode Corporation Council Party has requested the local government administration not to transfer its own funds to the Special Treasury Savings Bank (STSB) as requested by the state government, saying it would lead to administrative stagnation.

The state finance department has issued a circular requiring local governments to open accounts with the STSB at the beginning of 2021. The circular was clearly in violation of the Local Government Department’s previous decision allowing local bodies to keep funds in banks. The circular was issued again recently as many local bodies have refrained from complying with the order. The government, facing an extreme financial crisis, relies on funds from local bodies to cover much of its expenses.

However, the UDF instructed local government heads under its jurisdiction not to comply with the order, saying it was an attempt to steal funds. Self-funded funds are generated by local organizations through building taxes and permits.

“The third installment of the project share was supposed to be sanctioned in December 2023, but it is still pending. Due to financial constraints, the Corporation has been unable to proceed with the project even though the first and second installments were sanctioned. We have not been able to pay the contractors. The civic body relies on its own funds for employee salaries and daily expenses,” said UDF council leader KC Shobhita.

Currently, the Finance Ministry has capped the withdrawal limit per check at Rs 500,000. Restrictions apply when own funds are transferred to the Treasury. Shobhita added that businesses will be at risk as they will not be able to distribute salaries of their employees on time.

The UDF Council party warned the administration against making this move without the approval of the Corporation Council. “Earlier, the government stole the powers of local bodies and now attempts are being made to steal their funds. This is an injustice and an attempt to sabotage the Panchayat Raj system and the spirit of democracy. It goes against the grain,” she said.

As of now, Kozhikode is yet to receive Rs 150 million from the government as salary for its employees. “The corporation is being forced to borrow money for development activities. The administration has not been able to get due benefits from the LDF government,” said K Mohdeen Koya, deputy leader of the municipal council party, adding that the municipal council would later follow suit. He cautioned the mayor against following the usual routine of approving something in the hope that it would.