Punjab allows government departments to invest funds in commercial banks under new policy

The Punjab government has introduced a new policy allowing government departments to invest their funds in commercial banks, aiming to better manage and enhance public financial resources, reported 24NewsHD TV channel Wednesday.

According to official correspondence, the policy permits placement of government funds across all public and private sector banks, including Islamic banks and microfinance institutions. However, only those commercial banks with a minimum long-term credit rating of “AA” will qualify for receiving such deposits.

The policy further states that eligible banks must offer profit rates higher than those provided by the Bank of Punjab (BOP). Government funds may be allocated to banks offering more competitive returns.

In a provision designed to maintain competitiveness, the Bank of Punjab will be given an opportunity to match higher offers from other banks within 14 days of such proposals.

Officials said the initiative is aimed at improving financial discipline, optimizing returns on public funds, and strengthening the resource base of government departments.