The fiasco at Yes Bank, a private sector lender, has led some state governments to think on these lines.
Despite pleas from the Reserve Bank against it, the Maharashtra government on Friday issued a circular asking all its departments to shift their accounts to nationalised banks.
In the wake of reports of such moves being mulled by some states, the Reserve Bank had on Thursday written to state governments not to shift away from private sector lenders, flagging its concerns on financial stability.
The fiasco at Yes Bank, a private sector lender, has led some state governments to think on these lines.
"All the government offices, public undertakings, corporations are advised to ensure that all their banking-related businesses should be undertaken with nationalised banks itself," a government resolution from the Finance Department said.
It added that all the accounts opened with private or cooperative banks for holding any money for government schemes, excluding for salaries and allowances, should be shut by April 1.
Giving out a list of 11 nationalised banks, it asked officials to ensure that employees' salaries and allowances are paid only through the state-run lenders from April.
It also appealed to pensioners to shift their accounts to the nationalised banks and gave out a list of 13 banks with which the state government has an arrangement.
The GR also asks corporations and undertakings to ensure that their investments are made with the nationalised banks itself.
"We strongly believe that such a move can have banking and financial sector stability implications. We would like to point out that the RBI has adequate powers to regulate and supervise the private sector banks and by using these powers it has ensured that the depositors'' money is entirely safe," the RBI had reportedly said in the letter to all the chief secretaries.
"...apprehension on safety of deposits in private sector banks is highly misplaced and..such reactive decision will not be in the interest of stability of financial system in general and banking system in particular," it had added.