People wait in line outside a State Bank of India (SBI) branch in Delhi, India (Photographer: Anindito Mukherjee/Bloomberg)

SBI In Process To Shut Nine Foreign Branches

State Bank of India Ltd. is closing down another nine foreign branches as it looks to rationalise overseas operations.

The public lender has already shut down six foreign branches, managing director Pravin K Gupta told wire agency PTI. “There are nine more branches under the process to be closed down.”

The move to re-look foreign operations was approved as part of the banking sector’s agenda at the PSB Manthan at Gurugram in November last year. Public lenders were asked to examine all their 216 overseas operations, and shut down the ones that were not viable. SBI, India’s largest lender, operates in about 36 countries with nearly 190 branches.

SBI was looking to rationalise the foreign offices before public sector banks were mandated by the Department of Financial Services to wind-up businesses at unviable locations, Gupta said. “Branch rationalisation is an ongoing process. I think every branch has to justify its existence.”

So unless it is commercially viable, it doesn’t make sense for us to be operating particularly in foreign locations.
Pravin K Gupta, Managing Director, SBI

Gupta added that not all branches at foreign locations are full-fledged offices. In countries like Bangladesh and South Africa there are some small branches as well as some retail branches where rationalisation was needed. “Capital is generally a constraint for most of the bank sites. Obviously, you want to use your capital at the place where it is best utilised.”

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When asked if closing down branches overseas also means having no operations in those locations, Gupta said SBI will not be exiting the countries. It will only be closing down small branches or merging two to three branches into one. Besides, given the evolving regulatory environment back home, Gupta said the need to open more foreign offices at this point of time is not viable.

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“If you see globally, we are already present in the major centres. I don't think there is any major global centre where we are not present. So the need to go to too many new countries at this point of time is not really felt,” Gupta said.

By March 2018, state-owned banks had closed down 35 overseas branches and representative offices as part of the clean-and-responsible banking initiative. Bank of India, Andhra Bank, IDBI Bank and Indian Overseas Bank closed down Dubai operations, Punjab National Bank, Canara Bank and Union Bank of India shut their Shanghai offices.

Bank of India also closed down operations in Yangon and Botswana, while Bank of Baroda and Indian Overseas Bank shut their Hong Kong branch. In addition, PSBs have also closed down various representative offices.