Finance Ministry Asks Banks To Cut Costs

BanksBanks to cut non-essential expenses

No new cars, no interior decoration items, no refurbishment of guesthouses, and reduced entitlements and prerequisites for furniture and rent on housing, the finance ministry issued a serious diktat to public sector banks (PSB) to defer ‘avoidable’ expenditure until the next fiscal.

The ministry has directed PSBs to place its order on spending on publicity and conferences by 20% before their boards. The order came following reports that a large public lender – Punjab National Bank(PNB) had spent Rs 1.34 crore on three Audis to ferry its top management.

“In the context of the COVID-19 pandemic, it is necessary that banks take appropriate measures to ensure productive use of their financial resources for core business activities,” the order said.

The Finance ministry asked banks to rationalize expenses by weighing their operational profitability and cost to income ratio against the composition of vehicles on hire and the occupancy levels at guesthouses.

The government itself has taken a series of measures to tighten its purse strings by barring new scheme proposals for additional fund allocation other than Covid-19 related measures, limiting ministry and departments’ use of budgeted funds during the first quarter, and freezing hikes in dearness allowance.

Further, the ministry advised banks to take up this order in their next board meeting and issue appropriate instructions internally.

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