Punjab National Bank (PNB) plans to close down, merge or relocate about 200-300 of its loss-making branches over the next 12 months as a part of its consolidation plan.
Sunil Mehta, Managing Director and Chief Executive of PNB said, “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.”
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.
Mehta said they want to turn loss-making branches into profit-making units by tweaking their business strategy.
The New Delhi-based bank, which is also the country’s second largest public sector lender, has formed a group of senior officials to do a detailed study and lay out strategies for branch network rationalization.
PNB also closed down 928 ATMs in six months from 10,681 as on March end to 9,753 as on September end 2017.
The banking sector has gathered pace in its digitsation and use of technology thereby tempering the requirement of a large-scale expansion of the network and increasing small business correspondent (BC) outlets or business centres. PNB has 8,224 BC outlets and its customer base is at 100 million.
In May this year, the Reserve Bank of India (RBI) came out with a banking outlet policy giving banks 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 as business correspondent (BC) outlets.
Banks may shift, merge or close all “banking outlets” (except rural outlets and sole semi-urban outlets) at their discretion. A merger, closure, or shifting any rural banking outlet as well as a sole semi-urban banking outlet will require the approval of the district consultative committee or the district level review committee.
However, converting a rural or sole semi-urban banking outlet into a branch or vice-versa will not require such approval, the RBI policy said.
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