PSU banks identify 41 overseas units for rationalisation

Public sector banks (PSBs) have kickstarted the review of their overseas operations by identifying 41 units for “rationalisation” as part of the larger reform process, a top official said on Thursday.

Rationalisation could be in terms of consolidation of operations, trimming of staff strength, exiting some of the noncore and non-profit activities or closing down some of unviable overseas offices.

“Many banks entered the overseas markets. This activity has to be looked into. Banks have started the process already and about 41 operations they have decided to rationalise,” Financial Services Secretary Rajiv Kumar told PTI.

The government yesterday announced that it would infuse an unprecedented ~88,1.39 billion capital in 20 PSBs before March 31 to boost lending and revive growth.

It also unveiled steps to tackle the bad loan problem which has reached record levels.

The recapitalisation would be dependent on performance and reforms, it had said, adding that banks will have to adopt the differentiated business strate- gy and exit from non-core businesses and focus on their core competencies. “It is not everybody does everything. It is better if they focus on their core competencies and build on that. They should rather aspire for leadership in their identified market segments as per core competence rather than playing second fiddle,” he said.

Going forward, each bank will adopt a board approved policy as per its core strength and monetise their non-core activity, he said, adding that many banks have identified various non-core assets and started monetising them.