Vastavam web: State-owned Union Bank of India has decided to quit Antwerp diamond hub in Belgium as the branch did not generate expected business, a senior bank official said. The finance ministry had advised all the public sector banks to review their overseas business and close branches which are not profitable as part of strategy to conserve capital. According to the official of Union Bank of India, the bank has already filed for the closure of the branch and process related to shutting the office is being followed.
Banks have become very cautious with regard to diamond finance after the country’s biggest fraud of about Rs 14,000 crore perpetrated by diamond jeweller Nirav Modi. In February, Nirav Modi and Mehul Choksi were implicated in an alleged USD 2 billion fraud, involving the use of fake guarantees from Punjab National Bank to solicit loans that rocked the banking industry. Many other public sector banks (PSBs) plan to close or rationalise about 70 overseas operations during the current fiscal. These banks have already closed down 35 foreign operations last year.
The country’s largest lender State Bank of India (SBI) led the pack with nine of its overseas branches in the red. It was followed by Bank of India and Bank of Baroda with eight and seven branches, respectively. As on January 31, 2018, PSBs had about 165 overseas branches, besides subsidiaries, joint ventures and representative offices.