In A First, Private Sector Banks To Provide Financial Services To Defence Ministry In Overseas Procurement

The Defence Ministry has signed pacts with three private sector banks to provide financial services in overseas procurement.

"In line with further opening of allocation of Government business to Private Sector Banks by the Department of Financial Services, the Ministry of Defence (MoD) has assigned three Private Sector Banks viz HDFC Bank Ltd., ICICI Bank and Axis Bank to provide the Letter of Credit (LC) and Direct Bank Transfer business for overseas procurement by the ministry," the MoD said in a release on Thursday (7 July).

"MoUs in this connection have been signed with each of these three banks recently by PCDA (Principal Controller of Defence Accounts), New Delhi on behalf of MoD," the release said.

Till now, only authorised public sector banks were utilised to provide these services to the ministry.

With the signing of the pacts, for the first time three private banks have also been allowed to provide financial services for overseas procurement by the Defence Ministry.

The selected banks may be allocated with LC business of Rs 2,000 Crore, each on the capital and revenue side, for a period of one year on concurrent basis (Rs 666 Crore for each bank under both capital as well as Revenue), the release said.

The performance of these banks will be monitored regularly so as to take necessary further action as required, it added.