NEW DELHI: Stepping up its efforts to make public-sector banks financially viable, the government has asked PSU banks to shut their expensive overseas branches as well as loss-making domestic offices, and reduce the number of regional and administrative centres to save operational costs. According to sources in the know, the government took the decision after it felt there was no point in running such loss-making branches and putting the burden on the balance sheet of banks.
A Finance Ministry source confirmed the development, saying, “This is not a restriction but a corrective measure to improve PSU banks’ financial health.”The move is likely to result in job losses and affect hiring in the next fiscal. “Yes, there will be job loss. But it is difficult to give a number at this point of time. Anyway, the sector does not have a robust hiring outlook,” said a top executive with State Bank of India. “Banks are already rationalising their operations. However, overseas branches have many strategic advantages,” said the SBI executive. SBI has 195 foreign offices spread across 36 countries, while Bank of Baroda has presence in 24 countries through 107 branches and offices. In the past two years, SBI has closed around 7,000 branches post consolidation.
Others are also following suit. Bank of India has said it will shut down around 700 ATMs to “contain costs” as part of a turnaround plan. Indian Overseas Bank has reduced 10 regional offices in the country.
PNB is also planning to shut down or relocate up to 300 loss-making branches over the next 12 months. PNB is already exploring the possibility of selling a stake in its UK subsidiary PNB International.
According to the Institute of Banking Personnel Selection, recruitment in 2018-19 has been already hit with seven banks indicating zero hiring. Four others have not reported any intention to recruit yet.