On Thursday, the defence ministry gave three private sector banks permission to offer financial support to it for the purchase of military hardware from other countries. The banks include ICICI Bank, Axis Bank and HDFC Bank Ltd.
For services like the issue of letters of credit and direct bank transfers to the ministry for foreign purchase, only authorised public sector banks have been used up until now.
According to an official statement, the ministry has assigned three private sector banks to provide the Letter of Credit and direct bank transfer business for overseas procurement in line with the department of financial services’ continued opening up of government business allocation to private sector banks.
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‘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 ministry said, adding that ‘the performance of these banks will be monitored regularly so as to take necessary further action as required’.
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