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Government Ask Public Sector Banks To Shut Down Branches Incurring Losses


The government is constantly attempting to strengthen public-run banking institutions in the long-run through its several measures. The latest being prompt corrective action or PCA being invoked against some 10 PSBs.

Government Ask Public Sector Banks To Shut Down Branches Incurring Losses

Further to this, banks have been asked to rationalize their local and overseas operations so as to streamline their financials. Some of the major banks including SBI, PNB and BOB have already spearheaded such plans.

To save on capital, banks have been asked to consolidate local as well as international operations or branches which are making losses. Such losses also impact the balance sheet of the concerned entity significantly and hence it shall be wise to close down such operations for enhancing overall efficiency.

Indian Overseas Bank reduced its number of regional offices in the country by 10 from the previously existing 59 offices for cutting down on administrative costs as well as achieving economies of scale.

In respect of the overseas operations, ministry is of the view that presence of several banks in a single country is not needed and instead banks could explore subsidiary model by combining 5-6 banks for optimal utilization of resources and save on capital. Other than this banks are taking a call on closing branches or divesting stake in subsidiaries to put their focus on markets that yield them maximum returns.

With Inputs From PTI

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