SBI to chalk out circle-wise branch rationalisation plan

State Bank of India (nice pic).png 2

The SBI will draft a circle-wise plan for rationalising the group’s branch network. The plan, which includes relocation of bank branches, is in the light of the proposed merger of associate banks with the country’s largest lender.

According to a senior SBI bank executive, work on this rationalisation commenced nearly a year ago, much before the merger decisions were taken. The expansion of alternate platforms, including digital banking channels, has made the State Bank of India (SBI) to rethink on branches’ location. About one-fourth of the network would be impacted by this exercise.

Even though the SBI has adequate presence in metropolitan and large cities, there is room to cover remote and under-served areas.

The SBI Group presently has 22,000 branches, of which SBI alone has 16,800 units.

The bank has been going slow in expanding its branch network, adding 1,053 branches in FY14 and the following year, there were only 464 additions. In FY16, the bank added 451 branches.

The bank operates through 14 circles, while associate banks have strong presence in states where they are headquartered, the bank executive added.

Like, the State Bank of Jaipur and Bikaner (SBBJ) has robust network in Rajasthan and the SBI Group would capitalise on this. It would merge SBI’s branches with associate banks where the latter enjoy a strong presence.

The five associate banks to be merged include — SBBJ, State Bank of Patiala, State Bank of Mysore and State Bank of Hyderabad. The five associate banks have a market share around 5.3 per cent in deposits and 5.33 per cent in advances at March end, 2016. Their net profit stood at Rs 1,368.7 crore in March end, 2016.

Earlier, R Sriram, managing director (corporate banking), said the corporate finance branches of associates banks would be merged into parent branches as 60-70 per cent accounts were common and could have one relationship manager.

The group will benefit from the efficiencies created by the rationalisation of branches, common treasury pooling, and proper deployment of skilled resource base.

The associates have a little over 70,000 employees, or 34 per cent of SBI’s employee base.

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