State Bank of India (SBI) might shift its spot forex business back to Kolkata. A team of experts from State Bank of India's Mumbai office will soon visit its Kolkata circle to take a fresh look at the volume of foreign exchange business conducted by the circle and the viability of shifting some additional business here.
The SBI management has all along maintained that the Kolkata office conducts around 48 per cent of the bank's forex business. The unions at Kolkata have pointed out that the office is being underutilised as the actual share of forex trade was only around 35 per cent.
Transfer of spot exchange business, at present located at Mumbai, to Kolkata, is expected to correct this situation. Sources claimed the management at SBI has in principle agreed to transfer the spot forex business to Kolkata if the union's contention is found to be true.
The unions and management has been at loggerhead since half the forex business was transferred to Mumbai. Incidentally, the total forex business handled by SBI has been suffering since it was divided in 1998.
In 1997-98, profit from this department was Rs 463 crore. This declined to Rs 363 crore in 1998-99, and further in 1999-2000 to Rs 300 crore. The figure for 2000-01 was around Rs 250 crore.
Increased overheads because of two offices and additional cost of managing the dealing in two cities are mainly to blame, claimed union sources. Added to this is the increased cost of communication between the two offices.
SBI had initially, on the advice of McKinsey & Co, envisaged shifting the total forex operation to Mumbai. But strong opposition from SBI staff at Kolkata and some groups in Parliament forced the management to divide the operations into two.
On January 12, 1998, the management had agreed at a meeting with the unions that the bank's forex business would be handled equitably between Mumbai and Kolkata.
