PSU banks to close or rationalise 70 overseas branches this fiscal year

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As a part of their ongoing capital conservation process, public sector banks in the country are planning to shut down or rationalise 70 of their operations by the end of this fiscal year. PSU banks in India have operations in various foreign countries. This exercise is aimed at consolidating overseas branches and improving efficiency in the operations of foreign branches.

PSU banks

As a part of this exercise, unviable foreign branches are being closed by PSU banks while multiple branches located in the same cities are being rationalised.

In the previous fiscal year, public sector banks in India shut down 35 foreign operations in different countries. Data from the previous years revealed that Indian PSU banks had 159 branches in various foreign countries. For the fiscal year 2016-17, 41 of these branches reported losses. However, the total number of branches increased to 165 as of January 2018.

This consolidation exercise was initiated as per the banking sector agenda approved at last year’s PSB Manthan. Public sector banks were asked to rationalise their operations based on their competitive strength and viability. This rationalisation exercise focused primarily on achieving cost efficiencies and synergies in the overseas banking sector.

As a part of this initiative, various public sector banks including State Bank of India, Punjab National Bank, Canara Bank, Allahabad Bank, Union Bank of India, Indian Overseas Bank, IDBI Bank, Bank of Baroda, etc. have agreed to rationalise their branches in foreign locations.

Among public sector banks, SBI has the largest number of overseas operations with 52 branches in different countries. Bank of Baroda has about 50 overseas branches and Bank of India has about 29 overseas branches. Among the foreign countries with the largest number of branches of Indian PSU banks, the UK tops the list with 32 branches. This is followed by Hong Kong and UAE with around 13 branches each. Singapore occupies the next spot with about 12 branches.

Source: Economic Times

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