By the end of March 2024, the bank hopes to reduce the number of branches by 600 by closing or combining loss-making branches.
According to Reuters’s sources and document, the Central Bank of India, a state-owned commercial bank, aims to close 13 percent of its branches to restore its financial health, which has been under pressure for several years.
According to a copy of a document acquired by Reuters, the bank wants to cut the number of branches by 600 by closing or merging loss-making operations by the end of March 2024.
Branches to close down?
According to a government source who did not want to be identified, it is the most dramatic measure the lender has taken to strengthen its finances and would be followed by the sale of non-core assets such as real estate.
The closing of the branches had not previously been reported. The bank has been in business for more than a century and presently has 4,594 outlets
RBI action.
After the regulator discovered several state-run institutions violated its regulations on regulatory capital, bad loans, and leverage ratios, the RBI imposed quick corrective action (PCA) on the Central Bank and several other lenders in 2017.
Except for Central Bank, all lenders have improved their financial condition since then and have been removed from the RBI’s PCA list.
“The bank is striving to emerge out of RBI PCA owing to low-profit performance since 2017 and to use manpower more efficiently and productively,” according to a memo handed out by the headquarters on May 4 to other branches and divisions, outlining the rationale for the decision.
Emails and phone calls to the Central Bank of India were not immediately returned.
A bank subject to PCA is subject to increased regulatory monitoring and may face lending and deposit limits, branch growth and employment freezes, and other financing restrictions.
The RBI enacted these rules when Indian bankers were dealing with unprecedented amounts of bad debt, pushing the central bank to raise the thresholds.
“The action by the Reserve Bank of India is following its established goal of reducing loss-making assets on its books,” a government official said.
The bank had a profit of 2.82 billion Indian rupees ($37.1 million) in the December quarter, compared to 1.66 billion rupees in the same period.
However, its gross non-performing assets (GNPA) ratio remains high compared to its rivals, at 15.16 percent as of December 31.
The bank was placed under the PCA framework in June 2017, and it reported a loss of 7.50 billion rupees in that quarter, with a GNPA ratio of 17.27 percent.
Publish By: Sachin Sonawane
