NEW DELHI: Even as the full financial implication of the multi-crore scam at the Punjab National Bank is being ascertained, public-sector banks have started rationalising overseas operations. One of the major objectives of the exercise is to identify non-viable foreign branches and shut them for good.
The move is part of the “clean and responsible banking” initiative by the Department of Financial Services conceived at the two-day PSB Manthan held in Gurugram in November last. The government fast-tracked the initiative in the wake of a series of banking frauds coming to light, starting with the `12,700-crore scam involving the PNB.
“PSBs to consolidate 35 overseas operations without affecting international presence of PSBs in these countries; 69 ops (operations) identified for further examination. Move towards cost efficiencies and synergies in overseas market,” Rajiv Kumar, secretary, Financial Services tweeted on Thursday.
He said the operations of 216 overseas units of PSBs would be examined. “Non-viable operations in overseas market to be closed for cost efficiency and synergy. Operations in some geography to be consolidated. Consolidate equity stake in joint ventures having multiple PSB partners,” Kumar tweeted.
The 216 overseas operations include 165 foreign branches, subsidiaries, joint ventures and representative offices. The Finance Ministry plans to examine all these operations.
While observers see this move as a natural corollary of the banking frauds being detected, bankers claim the programme was already in the government’s agenda and that it has nothing to do with the PNB scam.
“This rationalisation of branches, whether overseas or domestically, was already on the agenda of the government. And, we did this exercise at the month-end that banks need to bring down operational cost,” said SBI chairman Rajnish Kumar.
Nothing new, says SBI boss
For the past three years, SBI has been rationalising overseas branches. For instance, the Paris branch was converted into a representative office, while the bank closed its Jeddah office, said the SBI chairman. SBI has the largest number of overseas branches at 52, followed by Bank of Baroda (50) and Bank of India (29)