July 23: Public sector banks including State Bank of India, Punjab National Bank, and Indian Overseas Bank etc, are planning to close down up to one-third of its overseas operations in an effort to cut costs and preserve capita.
According to a senior official in the Finance Ministry, state-owned banks like the aforesaid in addition to IDBI Bank and Bank of India will bring down its overseas operations to one-third of the current. Around 70 overseas branches of the total 216 foreign branches of these banks will be shut down.
The banks will be zeroing in on those branches that generate lesser revenue including full-fledged branches, representative offices and remittance offices. Profitable operations across the foreign countries will be retained by the banks and that include the likes of remittance offices in the Middle Ease such as those operating in UAE and Oman.
Banks have already initiated the process of closing down unviable branches alongside triggering the sale of non-core assets to reduce capita. According to report, around 37 overseas operations have already been closed down, and another 60-70 operations will be joining the list by the end of the current year.
Of the closed branches, six are of SBI, which also converted some of its branches in Sri Lanka and France to representative offices. Another nine operations in the overseas are expected to be winded up SBI during the current year.
The move follows the infusion of Rs 2.11 lakh crore capital in banks by government during November last year, following which banks were asked to cut down the costs by adopting various measures including the rationalisation of overseas branch operations. The freed up capital obtained through the closure of operations will be used by the bank for facilitating domestic operations.