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New capitals of Migrant banks Stage set for Indian ‘avatar’ of foreign banks Reaching out: is it slowing down? United India Insurance - Rs 110 crore losses have been claimed till now due to floods in Tamil Nadu Needed a Banking Atlas Aadhaar, niraadhaar and banking The paradox: clamour for the Goliath and David Mega merger is on Financial inclusion vs unclaimed deposits Who is the real beneficiary? Bottomlines shrink, bad loans rise... Indian customers are tech savvy Just 660 days! Target over-ambitious... Insatiable appetite for credit All that glitters is not gold... The collaboration suite of cyber criminals Why priority status? Banking in Telangana Another route for achieving financial inclusion Big bank merger, bigger expectations Drop in SLR- sparing lendable resources Banking on Risk Emerging crisis Nothing much can happen…. Cut in repo rate – lower than expected What is the priority – mergers or NPA reduction? Grows Bigger Drastic decline in asset quality Anytime banking to anywhere banking Capital base of regional rural banks raised Holy or unholy? Thirty more cities seek to become SMART Small finance banks offer high interest rates Small finance payment banks... Growing gainfully Cradle of banks to a smart city... Well-lived... Two banks: their jubilees and performances A development bank for BRICS Lacklustre credit expansion Smart banking in smart cities Bank deposits account for 46.3 per cent of household savings Merger mania haunts banks New bank licences, at last... LVB- A supermarket of financial services How okay are new banks? From lazy banking to easy banking How ‘secure’ are the secured loans? Cautious and considerate Rationalised Targets continue to be ad hoc Ferrying digital banking to Lakshadweep Greet Lakshmi the banking robot Growing volume of stressed assets… Payment banks have arrived Perhaps small is more beautiful than big! Hesitancy in announcing year-end results Managing NPAs... Banking overhauling or reorganisation? Good, bad and ugly Too big to fail and too small to sail Ernakulam excels... Why any time money? Small is ‘more’ beautiful One down in private sector Monetary policy continues to adopt dis-inflationary path Governance in Reverse Gear? Fund healthcare clinics in villages... A new development bank rising in the east… A bank for women, by women It’s a war on black money, support it. Reaching the Unreached…
 
Reaching out: is it slowing down?
The merger of five associate banks of State Bank of India and Bharatiya Mahila Bank with SBI is likely to dampen the expansion efforts. In the process of rationalisation, some branches of the associate banks are likely to be merged.

The total number of bank branches increased from 70,189 in June 2006 to 1,34,014 in June 2016. During those ten years the number thus almost doubled. Besides increasing the brick and mortar outfits, a new form of branchless banking was encouraged. 

However, in the last couple of years, the pace of growth slackened perhaps due to the growth of stressed assets and the shrinkage of the bottom lines. The decline in starting new branches started after 2013-14. The number of new offices reduced drastically from 10,269 that year to 7557 in 2014-15. There was a further drop to 5992 a year later.

With the wide variations in the size, heritage and age of various banks as well as the factors contributing to their entry into banking, there is no uniformity in their attitude towards spatial expansion. Like the State Bank, India’s biggest bank has always been in an expansion mode. It is omnipresent and is now planning to absorb five of its subsidiaries. Hopefully,  in the process of merger, the number of branches will not be slashed.  In the strategy of reaching out to the unreached, namely those who are still outside the reach of banks, reducing the number of existing branches would be a retrograde step.

Public sector banks, which account for 49 per cent of the total branch network do not exhibit enthusiasm in opening more branches. Even the private sector banks, whose share in the current branch network is not more than 16 per cent, are not willing to play ball. They are investing more on the digitisation of banking operations.            

Recently a new species called small finance banks entered into business. They have started opening branches. It may take longer time for them to have a sizeable number. Their contribution to the banking sector’s efforts of reaching out would not be significant in the short run. Bigger and older banks, have to expand their branch network to keep alive the process of reaching out. 

 

Closure of branches...

The recent merger of five associate banks of State Bank of India and Bharatiya Mahila Bank with SBI is likely to dampen the expansion efforts. In the process of rationalisation, some branches of the associate banks are likely to be merged. It is probable that over 1500 branches may get closed. How long it would take for them to open another 1500 branches is an imponderable question. There could be a significant number of unemployed bankers, despite the initiation of the VRS. Small finance banks and payment banks cannot absorb these bankers.

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