New Delhi: Oil and Natural Gas Corp. (ONGC) has protested the finance ministry directive of parking surplus funds only with state-run banks, saying these banks, on getting assured business, act as a cartel by offering interest rates which are lower than even those offered on retail deposits.

ONGC, which has a cash surplus of about Rs18,000 crore, is losing Rs200-300 crore in interest revenues annually after it was forced to discontinue the practice of calling competitive rates for parking its cash.

Clash of interest: ONGC’s R.S. Sharma says state-run banks’ interest rates on bulk deposits are lower than even those on retail deposits. Rajkumar / Mint

Other public sector units (PSUs) such as Bharat Sanchar Nigam Ltd, Bharat Heavy Electricals Ltd, NTPC Ltd and Steel Authority of India Ltd, too, have opposed the bailout of state-run banks at their expense.

Sharma wanted the petroleum ministry to convince the finance ministry to call a meeting of “PSUs having significant investible surplus funds to enable such PSUs to present their case".

“Although the matter has been taken up with the ministry of finance and the department of public enterprises, we find no response," he wrote.

Sharma said the finance ministry guidelines dated 1 December advised uniformity of card rates for bulk deposits for different maturities across state-owned banks.

“However, the interest rates for bulk deposits offered by public sector banks vary from bank to bank with a difference of up to 100 bps," he said, adding that some of these banks did not accept deposits on bulk deposit card rates published on their websites.

Sharma added that private sector banks were also making representations to the company to place deposits with them at card rates without inviting competitive bids, “which would not be a desirable practice".