PSBs asked to rationalise overseas, domestic branches 

PSBs asked to rationalise overseas, domestic branches 

Context

The finance ministry has asked public sector banks to look at rationalising their domestic and overseas branches as part of the reform process to strengthen their financials.

FinMin move is part of process to bolster balance sheets

The banks have been advised to pursue closure of loss-making domestic and international branches as part of a capital-saving exercise

‘Burden on financials’

There was no point in running loss-making branches and placing a burden on the balance sheet, so banks should look at not only big savings but also small savings like these for improving overall efficiency

Banks taking the initiative

• Many banks, including State Bank of India (SBI) and Punjab National Bank (PNB), have already taken initiative.
• Besides, Indian Overseas Bank has rationalised the number of regional offices in the country by reducing 10 regional offices from the existing 59, eyeing optimum utilisation of resources and reduction in administrative costs.

No need for multiple banks in a country

• The Ministry is of the view that there is no need for multiple banks in a single country, sources said, adding that banks can explore a single subsidiary formed with 5-6 banks coming together for conserving capital and realising economies of scale.
• As part of the rationalisation strategy, PNB is exploring the sale of stake in its U.K. subsidiary, PNB International. Bank of Baroda and SBI are also examining the issue of consolidation