Mumbai:
State Bank of India (SBI) is considering a proposal to either relocate or shut
down about 30 percent of its nearly 24,000 branches (SBI Group) to remain
competitive as advised by global management consultant McKinsey.
SBI
MD Rajnish Kumar confirmed that the bank had hired Mckinsey for branch
optimisation but did not offer any comment or detail about the size of the
rationalization. “We had engaged Mckinsey for branch and ATM optimisation and
customer enhanced experience programme,” Kumar said. “We have also engaged
Accenture Financial services to draw up a plan on our InTouch branches.”
As
part of its branch optimisation measures, State Bank of India recently either
shut down or relocated more than 400 branches to cut costs. The bank now has
16,784 branches and another 6,978 branches will be added to its network once
the associate merger process is complete by this fiscal year-end. The bank has
also gone slow in adding additional branches. While SBI added 1,053 branches in
FY14 that number fell to 464 in FY15.
The bank added 451 branches at the end
of the last financial year. SBI is currently gearing up for the merger of five
associate banks and the scope for cost rationalization is expected to increase
further. SBI will merge all its five subsidiaries — State Bank of Bikaner and
Jaipur, State Bank of Travancore, State Bank o Patiala, State Bank of Mysore
and State Bank of Hyderabad —with itself. “Going forward, we need to be present
where we need to,” Kumar said.
“Cost savings will definitely happen, otherwise why (would) you merge unless you can take benefit out of that synergy,” said Kumar. “We are mapping how many branches overlap location by location and in another 15-20 days, we will have a fair idea on that.” The bank is also looking at newer format for it branches. It has opened 133 InTouch branches which provides a variety of online services in self-service mode. When merged, the entity will be a banking behemoth with an asset base of Rs 37 lakh.
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