Defer avoidable expenditure, reduce costs: Govt tells public sector banks

\DFS has directed banks to avoid travel and adopt digital means of communication as well as make effective use of locally available administrative officers
The government on Wednesday asked state-owned banks to defer avoidable expenditure, including purchase of staff cars and refurbishment of guest houses, to ensure more productive utilisation of financial resources amid the coronavirus pandemic.

In a detailed advisory to the heads of all public sector banks, the Department of Financial Services (DFS) said it was necessary that the banks take appropriate measures to ensure productive use of their financial resources for core business activities.

The advisory also comes against the backdrop of Punjab National Bank recently purchasing three Audi cars worth over Rs 1.30 crore for travel of its top executives.

Banks are advised to defer avoidable expenditure beyond the current financial year, including purchase of staff cars, except where unavoidable, the advisory said.

DFS has also directed the banks to postpone expenditure on decorative, non-functional items for the interiors in non-customer facing premises like administrative offices and back offices, and refurbishment of guest houses.

Further, the banks have been asked to effect significant reduction in expenditure on activities other than those pertaining to core business activities.

"Economy in expenditure to the tune of 20 per cent year-on-year or more may be effected on activities or heads of expenditure such as entertainment, publicity, by making efficacious use of social media and press releases, and pooling resources with other PSBs (Public Sector Banks) for common publicity campaigns where appropriate," it said.

Besides, DFS has directed banks to avoid travel and adopt digital means of communication as well as make effective use of locally available administrative officers.

"The bank board's executive committee/ management committee may review the composition of the existing fleet of vehicles engaged on hire, while taking into account functional imperatives and the profitability and the cost to income ratio of the bank's operations and the occupancy level of guest houses," the advisory said.

DFS, which comes under the finance ministry, has asked banks to place the advisory before their respective boards and issue appropriate instructions internally.

"Top management may also suitably sensitise senior executives to give effect to this advisory in letter and spirit," it said.

In addition, DFS has directed banks for revision of entitlements and perquisites such as entitlements to fixed assets like vehicles and furniture and lease/ rent amounts admissible for hired residential accommodations.

Amid the pandemic, the finance ministry has asked all ministries and departments not to initiate any new scheme in the current financial year.

Earlier this month, the ministry said there was a need to use resources prudently in these difficult times.

Schemes that have already been approved for the current financial year would remain suspended till March 31 next year or further orders.


Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel