Page 42 - Banking Finance April 2019

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interval the documents, old records, vouchers of all branches staff quarters instead of paying amount for hiring
linked to DAC shifted at regular intervals. This type of accommodation to staff members.
initiative further reduces the requirement of branch space
which can be trimmed further to save the RTL costs further. Conclusion
To conclude, public sector banks spent Rs.6,997 Crores for
Premises Department or Subsidiary rent, taxes and electricity for the financial year ending 2018.
In some banks, premises issues are handled by a separate This is only recurring and direct expenditure, other indirect
department i.e., premises department, entire portfolio of expenditure like capital expenditure on ambience,
bank's premises (own / rent) will be handled by the premises manpower costs etc. for the primary channel is not
departments, they develop Standard Operating Procedures considered in the above analysis. Some of the banks are
(SOP) for RTL and closely monitor the same. In this model, having their own premises like Head Offices, Zonal Offices,
bank allots budget to control overall RTL of the bank. Here, District Head Quarters Branches etc, rent for these premises
specialist staff like civil engineers, electrical engineers to be is not taken into account (had it been hired to others) while
recruited to check / control the various costs of bank own / arriving total rent paid by the banks. If we take all direct
rented premises and this department closely monitors and and indirect expenditure, the primary channel is a costly one.
controls the budget given by the bank. This department
develops strategies to control the important expenditure of Without branches Paytm's registered users are 300 million,
RTL from time to time. over 7 million of Paytm merchants and average number of
daily Paytm transactions are Rs.5 million from rural to metro
Some public sector banks opened a separate subsidiary and in India (mobilization of funds from customers). Credit Cards
placed specialist staff like civil engineers and electrical holders are 3,74,84,955 with number of transactions as
engineers. Under this model, subsidiary of the bank is profit 12,80,77,981 and volume of Rs.4,46,774 Million
centre and not cost centre like premises department of the transactions on March, 2018 (lending to customers).
bank. Subsidiary of the bank not only providing services to
the parent bank but also to the other banks or financial Popularizing digital banking not only reduces the cost of
institutions for finalizing their premises, construction activity primary channel but also helps in optimal utilization of
and also ambience works with the help their own staff and Information Technology costs incurred by the banks.
earn profits. This model gives additional revenue to the bank. Implementation of cloud computing, black chain technology,
data warehousing and mining, educating the customers
Leased Accommodation to Staff about benefits of digital banking particularly to rural and
semi-urban centres, results fast implementation of digital
Members banking thereby dependency on primary channel will reduce
As far as possible, if banks provide staff quarters, they can gradually. Along with the above implementation and review
avoid staff members to stay in various parts of the city. Year- of RTL policy will help banks to decrease / control RTL costs
on-year rents payable by the banks for the leased and other overheads. To increase the bottom line, banks
accommodation provided to the staff members is on should focus on controlling all types of costs, thereby
increasing trend. To arrest this situation wherever own stakeholder's confidence will increase.
space is available, banks may construct staff quarters to
reduce overheads of rent paid to the staff members for the
leased accommodation.

In metros staff normally prefers to use the bank quarters
instead of leased accommodation even though the place of
working from the quarters is far away. But in Tier-I, II and
III Cities and Towns, they prefer to stay in leased
accommodation instead of banks' own quarters. To reduce
the overheads of rent of staff accommodation and also to
increase the productivity levels of staff, banks may provide

42 | 2019 | APRIL | BANKING FINANCE