The Finance Ministry has asked public sector banks (PSBs) to cut non-core expenditure by at least 20% this year so that they can ensure productive use of their financial resources for core business activities.
“Effect significant reduction in expenditure on activities other than those pertaining to core business activities,” the ministry said in a communication to PSBs. “Economy in expenditure to the tune of 20% year-on-year or more may be effected on activities such as entertainment, publicity… travel.”
These banks have also been asked to effect cost-cutting measures by deferring avoidable expenditure like purchase of vehicles for staff, spending on decorative items, refurbishment of guest houses, among others.
Recently, Punjab National Bank ran into a controversy when it took delivery of three luxury Audi cars, to be used by the managing director and two senior executive directors. The three cars cost the bank ₹1.34 crore.
The communication from the ministry said that publicity costs should be curtailed by making effective use of social media and press releases, and by pooling resources with other PSBs for common publicity campaigns.
It also directed bank boards’ executive committees to review the composition of existing vehicles on hire, “while taking into account functional imperatives and profitability and the cost to income ratio of bank’s operations.”
The public sector lenders have also been asked to defer perquisites such as entitlements to fixed assets like vehicles and furniture and lease/rent amounts admissible for hired residential accommodation.