In a first, Defence Ministry clears three private banks for providing financial services in its overseas procurements

Indian defence minister Rajnath Singh

The Defence Ministry has signed pacts with three private sector banks for providing financial services to the ministry is overseas procurement of defence-related items.

The move, according to the defence ministry, is in line with further opening of allocation of government business to private sector banks.

The three banks – HDFC Bank, ICICI Bank and Axis Bank – will be the first such private sector entities to provide financial services to the Ministry of Defence in overseas purchases.

“MoD (Ministry of Defence) has assigned three Private Sector Banks viz HDFC Bank Ltd., ICICI Bank and Axis Bank to provide the Letter of Credit and Direct Bank Transfer business for overseas procurement by the Ministry,” the Defence Ministry said in a statement.

“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 statement said.

Till now, only authorised public sector banks were utilised to provide these services to the Defence 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 MoD, it said.

“The selected banks may be allocated with LC business of Rs 2000 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 statement said.

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

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