NEW DELHI (PTI):  The defence ministry has allowed three private sector banks to provide financial services to it for overseas procurement of military hardware.

The banks are HDFC Bank Ltd, ICICI Bank and Axis Bank.

Till now, only authorised public sector banks were utilised to provide services like issuance of letter of credit and direct bank transfers to the ministry for overseas procurement.

In line with further opening of allocation of government business to private sector banks by the department of financial services, the ministry has assigned three private sector banks to provide the LoC and direct bank transfer business for overseas procurement, an official release said.

"The selected banks may be allocated with LC business of Rs 2,000 crore, each on the capital and revenue side, for a period of one year on concurrent basis (Rs 666 crore for each bank under both capital as well as Revenue)," the ministry said.

"The performance of these banks will be monitored regularly so as to take necessary further action as required," it said.