Bank of India has said it is considering a move to cut the balance sheet of its private sector banking business.
The Reserve Bank of Indian Industries (RBI) on Thursday said that its commercial banking business will be able to return to growth but it will be less profitable in the coming months, following a year of falling revenue.
Its move comes after it cut the dividend for its banking group by around 15 percent in January and cut the profit margin of its commercial bank group by 10 percent.
It has also said that it would allow foreign exchange trading in its banking unit to resume on July 1.
The RBI said it will take the decision as it is looking at the financial outlook of the commercial banking sector and the economic environment.
Earlier, RBI Governor Raghuram Rajan had said that the bank’s commercial banking unit will be profitable in July, which would be the third consecutive year of a growth rate of 10 to 12 percent.
Rajan said the government would support banks with liquidity and credit, but he did not elaborate on what he meant by “the financial environment”.