The cumulative rationalisation of 2,300 odd branches so far by five public sector banks (PSBs) due to amalgamation is proving to be a godsend for other banks planning network expansion.
It has opened the doors for other banks to move into ready-made branches vacated by the five PSBs — Bank of Baroda (BoB), Punjab National Bank (PNB), Canara Bank, Union Bank of India (UBI) and Indian Bank.
The desperation of owners of these vacant premises to rent them out is turning out to be advantageous for other banks. So, network expansion can happen faster without much hassle and at a cheaper rent.
The five aforementioned PSBs have been merging or rationalising branches after the amalgamation of other PSBs with them.
Branches in close proximity to each other are being brought under one roof to cut down on operating expenses.
AS Rajeev, MD & CEO, Bank of Maharashtra (BoM), observed that about 25-30 per cent of the branches opened by BoM last year were either in the premises vacated by the PSBs due to amalgamation, or in BSNL buildings.
“The rent is comparatively less. That is why our rent is not increasing despite rise in the number of branches,” he said. BoM, which opened 82 branches last year, plans to open about 100 branches in FY22.
BK Divakara, CFO, CSB Bank, noted that with the amalgamation among PSBs resulting in overlap of branches in some locations, these banks are merging the operations of two or three branches into one. So, ready to occupy branch premises are available.
CSB Bank is actively scouting for ready-to-move branches, which usually come with a strong room (constructed as per central bank specifications), counters and furnishings. In such cases, only the strong room lock and key needs to be changed.
Divakara said the bank opened 101 branches last year and plans to open 200 this year. About 30-40 branches opened last year and this year so far have been at the premises vacated by the PSBs.
Branch rationalisation
After the amalgamation of Dena Bank and Vijaya Bank with BoB with effect from April 1, 2019, the latter merged or rationalised 1,310 branches.
PNB merged/ rationalised about 430 branches after the amalgamation of Oriental Bank of Commerce and United Bank of India with it with effect from April 1, 2020.
Canara Bank merged or closed 105 branches after the amalgamation of Syndicate Bank with it with effect from April 1, 2020.
Union Bank of India merged or closed 275 branches after the amalgamation of Andhra Bank and Corporation Bank with it with effect from April 1, 2020.
Indian Bank rationalised 203 branches after the amalgamation of Allahabad Bank with it with effect from April 1, 2020.