Public Sector Banks (PSBs), including State Bank of India, Punjab National Bank, Indian Overseas Bank, IDBI Bank and Bank of India, are likely to shut one-third of their overseas branches. With an aim to tone down the cost and preserve capital, the Public Sector Banks have decided to close 70 of their 216 foreign branches, according to Indian Express report. Remittance offices in Gulf countries such as Oman and UAE, which are not generating required revenues, are being closed down.
“The banks have initiated sale of non-core assets, closure of unviable branches and other steps to reduce capital. So far, they have closed down 37 overseas operations and another 60-70 operations will be closed down by the end of the year. These operations are a combination of full-fledged branches, representative offices and remittances offices,” the official was quoted as saying by IE.
SBI, which has already closed six foreign branches, has converted its branches in France and Sri Lanka into representative offices. SBI is planning closure of another nine branches. Some banks have already closed their operations in locations such as Dubai, Shanghai, Jeddah and Hong Kong.
This came after the central government had infused Rs 2.11 lakh crore in PSBs and asked banks to rationalise operations outside India. The closure of branches in foreighn locations will help banks utilise capitals in domestic operations, the report says.
The Finance Ministry had approved fresh capital infusion of Rs 11,336 crore in five state-owned lenders — Punjab National Bank, Corporation Bank, Andhra Bank, Allahabad Bank and Indian Overseas Bank.