As a part of its consolidation plan, the country's second largest public sector lender Punjab National Bank (PNB) has planned to close down, merge or relocate about 200-300 of its loss-making branches over the next 12 months. This was revealed by Sunil Mehta, managing director and chief executive, Punjab National Bank. "We have closed 2 or 3 branches so far. One of our departments is working on it. We have identified about 200-300 loss-making branches. So, either we will prepare a plan for revamping them, or merger, closure or reopening them at other locations," he said. In fact, to carry out this plan, the Punjab National Bank has formed a group of senior officials to do a detailed study and lay out strategies for branch network rationalization. According to Mehta, the bank wants to turn loss-making branches into profit-making units by tweaking their business strategy.
At the end of March 2017, the bank had 6,937 branches, while it added nine branches from April to June taking the network to 6,946, but in the second quarter, PNB had closed down a total of six branches taking the network tally to 6,940 branches by September end. Moreover, the bank had also closed down 928 ATMs in six months from 10,681 as on March end to 9,753 as on September end 2017.
According to bank officials, digital banking had gathered pace and a substantial expansion of the BC network was helping the bank to enhance its outreach. This has tempered the requirement of a large-scale expansion of the network. PNB, with a customer base of 100 million, has 9,753 ATMs and 8,224 BC outlets as of September.
The Reserve Bank of India's (RBI's) new policy on outlets gave flexibility in locating branches and outlets, added Mehta.
According to RBI's revised banking outlet policy, banks have been given more leeway in opening, relocating, and closing down branches. The focus is reaching customers to provide financial services and that could be done through brick-and-mortar branches as well business correspondent (BC) outlets. Banks may shift, merge or close all "banking outlets" (except rural outlets and sole semi-urban outlets) at their discretion.