Hyderabad: The Andhra Pradesh government on Monday asked banks not to take cognisance of the instructions issued by Telangana related to banking transactions and follow orders of only authorised officers.

As per reports, a circular to this effect was issued to banks on Monday evening by AP's Secretary (Budget and Institutional Finance). The circular came in the backdrop of the threat issued by Telangana government vide a memo on October 30 and the directives of Telangana authorities to freeze certain bank accounts of AP government-run bodies. Banks are governed by the Negotiable Instruments Act.

The Telangana government has no locus standi to ask banks to follow its instructions, Parakala Prabhakar, AP Governments Communication Advisor, asserted.

In his circular, the Secretary noted: Banks, as per the statute, have to acton the instructionsof officers of the body corporates who are authorised toissue these instructions. They are not expected to take cognisance of any other instructions from anybody, other than the person authorisedto transact business with the bank. He requested the banks to ensure transactions related to the finances ofthe government of AP and institutionsare conducted asperthe provisionsof AP Reorganisation Act.

The circular was issued after Telangana Chief Secretary Rajiv Sharma asked banks to freeze the accounts of AP Government alleging the latter unauthorisedly transferred funds related to the Building and Other Construction Workers Welfare Board from Hyderabad to Vijayawada. It's (charge of illegal transfer) a blatant lie. At a meeting with AP Chief Secretary I Y R Krishna Rao and other top officials on September 23, the Telangana Chief Secretary said the deposits of Board are kept in various banks in Hyderabad and Secunderabad and action may be taken to transfer funds to Vijayawada.

Accordingly, Rs 850 crore was moved to bank branches in Vijayawada, Prabhakar said. Despite this, Telangana Government and Hyderabad city police have issued threats to the banks asking them to freeze the accounts and not honour cheques issued by AP, he said. What locus standi does Telangana have? It's an issue between the two Governments and banks cannot be dragged into it, Prabhakar said. The AP government was acting totally in accordance with the Reorganisation Act and other relevant laws, he asserted.