Brokers Oppose Relocation

The Calcutta-Mumbai tussle for ownership of the forex operations of the State Bank of India has turned into a battle between the Mumbai lobby and the brokers of Calcutta.

The foreign exchange brokers in Calcutta have challenged the move to shift the SBI foreign department to Mumbai with effect from April 1.

Though no policy decision has been taken to shift the vital operations to Mumbai, brokers feel that SBI is secretly and stealthily moving the foreign exchange operations of the foreign department out of Calcutta.

This will cripple the financial market in the city where SBI originated and from where the forex transactions have been operating for long. About $80 million is transacted every day by the brokers which forms 40 per cent of the entire forex operations.

 

Brokers of Calcutta will lose that business if the foreign department is shifted. R R Puri, chairman of the Calcutta Exchange Brokers Association, said the move has no rationale and was prompted by the Mumbai lobby comprising bankers and brokers of Mumbai. While the Mumbai lobby seems to be successful in getting SBI to move its forex operations, the Calcutta brokers are left with no alternative.

but to move from door to door to prevent the bringing of the forex and treasury operations under one roof at Mumbai.

Puri said the McKinsey report (which recommended merger of the two divisions) did not contain suggestion that the merged body should be set in Mumbai. However, the move itself comes in conflict with the RBI directive for decentralisation of operations.

The SBI foreign department in Calcutta had recently installed expensive and sophisticated systems considered to be one of the best in Asia for smooth forex operations. This will go waste if the forex operations are shifted to Mumbai.

Puri said the eastern region forex covering operations will come to a halt resulting in exporters from the region losing hold over a vital area. The foreign exchange market will disappear altogether from Calcutta with the exit of SBI foreign department, he added.

Puri also pointed out that private and foreign banks which were ready to set up their forex dealing rooms in Calcutta were now holding back plans.