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Home >> News >> Finance Ministry Suggest PSU Banks to Close Loss Making Branches

Finance Ministry Suggest PSU Banks to Close Loss Making Branches

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IndiaNewsonWeb: 26 Dec, 2017, The Finance Ministry has suggested to shut down the branches in the deficit to the government banks, which are struggling with the problems of stranded debt (NPA) and stressed debt. The Ministry has described it as a necessary step to improve the financial condition.

According to official sources, the ministry has told the banks that there is no justification for the loss-making branches. These increase the pressure on the bank's balance sheet. State Bank of India (SBI) and Punjab National Bank (PNB) have already taken steps in this direction. With the aim of reducing the maximum utilization of resources and administrative cost, Indian Overseas Bank has also reduced the number of regional offices from 59 to 49 in the country.

In the context of international branches, the Ministry has asked banks to consider the integration and stop some non-essential branches. The ministry says that there is no need to have many Indian banks in any one country outside. There should be a consideration of running a single branch in the form of subsidiaries of five to six banks. Government banks may also consider closing or selling some branches to focus on the markets with maximum return. Under this, PNB is exploring the possibility of selling stake in its subsidiary PNB International in the UK.

Domestic deposits in south states deteriorate even after the demonetization

Despite the demonetization in November last year, the growth rate of domestic deposits in the southern states was slow in the financial year 2016-17. According to the RBI data, due to the demonetization on bank deposits, there was a substantial increase in domestic deposits in the last financial year. In the last financial year, these deposits grew by 14.1 per cent compared to 12.3 per cent in 2015-16. However, during this period the growth rate in the southern states has declined. The growth rate of 13.3 percent in 2016-17 is 13.3 percent in 2015-16. The slowest growth seen in Karnataka, Tamil Nadu and Telangana.
 

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