The Finance Ministry has directed all state-run banks to undertake austerity measures “to ensure productive use of their financial resources for core business activities”.
State-run banks, the Department of Financial Services said in a letter dated June 17, must defer avoidable expenditure, beyond the current financial year, on the purchase of cars, refurbishment of guest houses and expenditure on decorative and non-functioning items for the interiors of non-customer facing premises like back offices and administrative offices.
BloombergQuint has seen a copy of the letter.
Other austerity measures proposed by the department include:
- Expenditure on activities like entertainment, publicity, travel and organising meetings should be curtailed to the tune of 20% or more.
- Banks have been advised to pool resources with their state-run peers for publicity campaigns, while in the case of travel, they have been advised to adopt digital means of communication and utilise locally available administrative offices.
- The banks' board of directors, executive and management committees may review expenditure in non-core business activities. This includes the use and composition of existing vehicles hired by the bank and the occupancy level of guest houses.
- The ministry has advised banks to defer revision of entitlements and perquisites such as those to fixed assets like furniture and vehicles, and lease or rent amounts for hired residential accommodation.
- The department's advisory must be placed before the banks' boards at their next meeting based on which internal instructions are to be sent to implement these measures, the letter said.
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