Overseas Operations Of 8 Banks Under Reserve Bank Scrutiny

The Reserve Bank of India (RBI) has sought details of last years operations by foreign branches of eight major public sector banks.

In a circular issued on June 9 to the chairmen and managing directors of these banks, the RBI has asked the Canara Bank, Bank of Baroda, Bank of India, Uco Bank, Syndicate Bank, Indian Overseas Bank, State Bank of India and Indian Bank managements to furnish information about last years activities undertaken by their overseas branches by June 16.

Officials said that the review has been prompted by a government move to seek information regarding the overseas operations of these banks.

The information sought by the RBI includes details of the branch network abroad, especially the number of foreign branches, the country and location of these branches besides the date on which they were opened.

These banks will also have to furnish details of which foreign branches were closed down in the past year, if any, and why.

The RBI has also sought the business strategies adopted by these banks. This would entail providing details of exposures and kind of business or industry financed by them. Information will also have to be given on attempts at diversification of business, especially if these relate to India-based clientele or corporates.

An important section of the review by the Reserve Bank will focus on the changes in banking regulations in the host countries where the foreign branches are located. Specific details have been asked for with regard to changes in capitalisation, retention of overseas surpluses, funds mobilisation, deployment and exposure in the home country.

Statements of branchwise (overseas) assets and liabilities with break-up of individual items have been asked for.

Also under review will be the problem credits for 1997-98 fiscal and their share in global advances.

The apex bank is expected to analyse the profitability of the overseas sector and the profit and loss accounts of branches that have sustained losses for the year ended on March 31. RBI has also asked for the review of the profitability of the overseas branches that were placed before the top management of each bank.

Comments, too, have been sought from the management of each bank on the future viability of operations which have incurred losses in fiscal 1996-97.

The apex bank has also sought comments about those branches which have accumulated losses.

The banks would also have to furnish details of the remittances made abroad in the nature of capital and subvention funds during the year ended March 31.

The banks would have to explain the reason necessitating the remittances.

The attempts by these banks to bring qualitative improvements in technology and manpower regarding the overseas sector have also to be highlighted in their reports.