Pretoria: The Bank of Baroda (BoB) which has been in operation in South Africa for the last 21 years has decided to exit the country. They made the decision in the wake of a scandal involving the lender’s funding of Indian-origin businessmen Gupta Brothers, accused of being cronies of the Jacob Zuma-led administration. In a communication to South African customers, BoB said that it has decided to cease operations in South Africa territory in view of its strategic plan for rationalisation of branches in international markets. “The branch will stop taking new/incremental deposits and disbursing loans with effect from March 1, 2018. Further, it will cease to operate and conduct the business of a bank with effect from March 31, 2018,” the mailer said.
A BoB spokesperson said that the business of the bank in South Africa is not very significant and the exit will not have any major impact on its financials. He also said that BoB was working with the regulators for an orderly exit. In a statement, the South African Reserve Bank (SARB) said that BoB has notified the Office of the Registrar of Banks of its exit from South Africa. “The registrar, which is part of the SARB, is in discussions with the Bank of Baroda to ensure its orderly withdrawal from South Africa so that no depositor is disadvantaged,” the SARB said in its statement.
Earlier in an interview, BoB chairman P S Jayakumar said that the bank is talking to regulators around the world to shrink its presence in geographies that do not provide a strong business as it plans to focus on larger markets where it can grow its business. According to local South African news reports, BoB had violated norms on single party exposure in its dealing with the Gupta brothers. The brothers are a reference to Ajay, Atul and Rajesh Gupta, originally from Saharanpur in Uttar Pradesh, who have set up base in South Africa. There have also been news reports that BoB has facilitated dealings between the Gupta brothers and South Africa’s President Jacob Zuma’s family. BoB had also said that it was fined an equivalent of £500,000 by the South African banking regulator. Following the penalty, BoB informed the stock exchanges that SARB was investigating allegations against the bank and it is actively cooperating and supporting these investigations.
