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Nirav Modi effect: Union Bank of India quits Antwerp diamond hub in Belgium

Press Trust of India/New Delhi 16 Sep 18 | 12:15 PM

Union Bank of India

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.

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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.

Accounts are being transferred and manpower is also being relocated as part of closure process, the official said.

The bank opened this branch in Belgium in June, 2014.

Banks have become very cautious with regard to diamond finance after the country's biggest fraud of about Rs 140 billion perpetrated by diamond jeweller Nirav Modi. In February, Nirav Modi and Mehul Choksi were implicated in an alleged $2 billion fraud, involving the use of fake guarantees from Punjab National Bank to solicit loans that rocked the banking industry.

ALSO READ: Months before PNB scam blew up, Nirav Modi bought property in New York

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.

According to the data, 165 branches of PSBs are operating in foreign countries, of which 41 branches were in losses in 2016-17.

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.

ALSO READ: Union Bank of India posts surprise first-quarter profit at Rs 1.30 bn

State Bank of India has the largest number of overseas branches (52) followed by Bank of Baroda (50) and Bank of India (29). The state-owned banks have the largest number of branches in the UK (32) followed by Hong Kong and the UAE (13 each) and Singapore (12).

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