Department of Financial Services (DFS) has issued a directive instructing public sector banks to get their strategies for reversing their loss making branches into profitable branches, approved by their respective boards, at the earliest. The directive has been issued even to banks such as SBI and IDBI.
A number of banks have already prepared such strategies but they cannot implement the strategies as they are yet to be approved by their respective boards.
According to official sources, the Finance Ministry is of the view that it is important for banks to implement these strategies quickly. Only then can the loss incurring branches of the banks be turned into profitable branches.
Once the branches start earning profits it would boost employee's morale besides improving the figures in the books of the banks, such as net profit, net interest margin and business per employee.
The Department of Financial Services, also said that after these strategies get approved by the boards of the banks, the responsibility of attaining the targets would lie with the regional/zonal managers of these banks.
Mr. D.K. Mittal, the Financial Services Secretary, further added, "If there are loss-making branches, then we have to re-look them. Ultimately, branches have been set up to earn."