With as many as 11 public sector banks (PSBs) being put under prompt corrective action (PCA) by the Reserve Bank of India for their non-performing assets (NPAs) and net losses, as part of the reformation, the Government of India has announced that they would infuse Rs.2.11 lakh crore capital in such PSBs to bring about a balance against the rising net losses and NPAs. While the Government of India has made their move to revive banks placed under PCA, it has asked public sector banks to rationalise branches, especially those abroad or overseas.
Out of the 216 foreign branches, public sector banks have decided to close 70 branches as of now, and the numbers are bound to increase over the next few months. The Government of India has directed PSBs to close their foreign branches that are failing to bring them any capital and that are not financially viable at present.
Leading the way, State Bank of India has already shut down 6 foreign branches, and are in the process of shutting down another 9 overseas branches. However, their branches in Sri Lanka and France will be converted into representative offices. In addition, public sector banks are all set to close their branches in places like Hong Kong, Jeddah, Dubai, and Shanghai.
To revive ailing banks that are under prompt corrective action (PCA) and have inevitably been put under lending restrictions as part of the program, over the last few days, the Finance Ministry has approved of fresh capital infusion amounting to Rs.11,336 crore. The banks that will be on the receiving end of the fresh capital infusion are Indian Overseas Bank, Allahabad Bank, Punjab National Bank, Andhra Bank, and Corporation Bank.
Source: Financial Express