MoD would use financial services from HDFC Bank, Axis Bank, and ICICI Bank for overseas procurement

According to the ministry, the three large private banks may be given concurrent access to LC business totaling 2,000 crores on both the capital and revenue sides for a period of one year (666 crores for each bank under both capital and revenue).

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The first private banks to offer financial services in foreign purchase for the Defense Ministry are HDFC Bank, Axis Bank, and ICICI Bank. Only public sector banks were permitted to provide these services to the ministry up until this point.

However, the Defence Ministry on Thursday assigned three private sector banks, namely 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. This was done in accordance with the Department of Financial Services’ continued opening up of allocation of government business to private sector banks.

A Memorandum of Understanding (MoU) has just been signed with each of these three banks by PCDA, New Delhi, on behalf of the Defence Ministry.

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“Till now, only authorised public sector banks were utilised to provide these services to MoD. With this for the first time three Private Banks have also been allowed to provide financial services for overseas procurement by MoD,” the ministry said.

Additionally, according to the ministry, the three largest private banks may be given LC business totaling Rs 2,000 crores on the capital and revenue sides, concurrently, for a period of one year (Rs 666 crores for each bank under both capital and revenue).

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

In terms of market valuation, HDFC Bank is the largest bank, followed by ICICI Bank, SBI, Kotak Bank, and Axis Bank. In the top 10 most valuable firms on the BSE are HDFC Bank, ICICI Bank, and SBI.