The Ministry of Defence has assigned three private banks, HDFC Bank, ICICI Banks, and Axis Bank, to provide the Letter of Credit (LOC) and Direct Bank Transfer business for overseas procurement by the ministry. This is in accordance with the department of financial services’ continued openings of allocating government business to private sector banks. According to a communication from the Defence ministry on Thursday, the Chief Controller Accounts, New Delhi recently signed MoUs with each of these three banks on behalf of the ministry.
For a period of one year, on a concurrent basis, the chosen banks may be given LC business totaling Rs 2,000 crore on both the capital and revenue sides.
Up until recently, the government has only received these services from authorised public sector banks. With this, the government has for the first time permitted three commercial banks to offer financial services for overseas procurement.
