On the first day of inter-bank operations at Mumbai, the State Bank of India (SBI) bought $5.5 million on Monday.
The move was the first important step towards integrating foreign exchange and domestic treasury divisions of the bank under one roof at Mumbai. R C Royappa, SBI general manager in charge of foreign department, confirmed that inter-bank operations would in due course be fully shifted to Mumbai.
Stating that policy decisions can be taken only by the SBI management, he said all the accounting work would be retained by Calcutta's foreign department.
The first day's inter-bank operations from Mumbai were expectedly executed on makeshift basis. Dollar were bought by the treasury division and out of five transactions four were executed through one Mumbai-based broker, Pitambar Kanji.
SBI's foreign department in the city will retain the corporate dealing room and back office. The third stage of inter-bank dealing, which covers forex trading, will go to Mumbai and will be merged with the domestic treasury. But the last stage relating to the accounting procedures will again be retained by the foreign department here.
The employees at the foreign department here had alleged that the bank will ultimately shift the entire foreign department to Mumbai. The issue assumed political importance as the chief minister of West Bengal, Jyoti Basu, himself asked the SBI chairman, M S Verma, to review the decision before shifting the inter-bank operations from the city.
While the banking and political circles in eastern India were stunned by the SBI's quiet but decisive move to start forex dealing at Mumbai, it is discussed that the foreign department, based in Calcutta since the inception of the bank, will not only lose its major operation but will go into oblivion gradually.
SBI management's stiff attitude has come as a surprise because of the fact that quite recently assurance was given by the minister of state for finance, K R Janarthanan, that the decision was put on hold.
In fact, the minister told the special secretary (banking), C M Basudev, only on August 6 last that the bank should be asked not to proceed with the shifting.
The minister intervened on the representation of Basudeb Acharya, CPI(M) MP, from West Bengal.
It is assumed that the special secretary passed on the minister's message to the SBI management. But the bank was determined to go ahead with the integration processes purly on commercial consideration, Verma had told newspersons in Calcutta on June 18 last.
