Page 42 - Banking Finance March 2019

ARTICLE

Banking system is divided into TWO i.e., Marketing of bank of new branch premises, this bench mark can be utilized for
products and Processing of bank products. Marketing allocate budgets for the proposed branch.
function is being handled by branches and operations /
processing function by Central Processing Centres (CPCs) and For better utilization of bank branches, banks should
other alternate delivery channels. segregate total business of the branch into Digital Business
Vs Non-Digital Business i.e., total business minus customer
Thereby Banks' primary channel i.e., branches became transactions through branch is Digital Business of the branch.
purely marketing / selling outlets to sell various bank For example, if any customer has taken loan against his own
products including cross selling of various third party financial fixed deposit through Internet Banking, it is to be classified
products and central processing centres (CPCs) are taking as Digital Advance business.
care of 75% to 80% of workload i.e., operations / processing
functions of branches particularly at Tier-I, Tier-II and Tier- If same customer visits the branch to avail loan against his
III cities / towns. Whereas in rural areas still the primary own fixed deposit by giving loan application form, Demand
channel i.e. branch continues to be an important channel Promissory Note etc. it should be classified as Non-Digital
to sell and processing bank products. Business. In similar manner cash withdrawal / deposits
through ATMs / CDMs. If more number of customers is using
As per annexure-I, Top five banks in business alternate delivery channels of a particular branch, there is
performance for the financial year ending 2018 is a scope to trim the branch premises. Overheads like Rents,
as follows: Taxes & Lighting (RTL) can be controlled, by using the
information of Digital vs. Non-Digital business of the branch.
Name of the Bank Total Business Average
(Deposits + Business
As per Annexure-I, the top five banks in bottom-
Advances) per Branch line performance for the financial year ending 2018
(In Crs.) (In Crs.)
are as follows:
State Bank of India (SBI) 46,41,223 207.07
Name of the Bank Loss (In Crs.)
Punjab National Bank (PNB) 10,75,961 153.84
Punjab National Bank -12,283
Bank of Baroda (BOB) 10,18,747 186.34
IDBI Bank -8,238
Canara Bank (CB) 9,06,475 145.92
State Bank of India -6,547
Bank of India (BOI) 8,62,234 166.26
Indian Overseas Bank -6,299
Analysis Bank of India -6,074
Average per branch business is highest in IDBI Bank
(Rs.219.03 Crs.) followed by SBI (Rs.207.07 Crs.), BOB Analysis
(Rs.186.34), UBI (Rs.167.95), BOI (Rs.166.26 Crs.). Lowest Above table shows the bottom-line performance of TOP Five
per branch business is in United Bank of India (Rs.96.27 Crs.). loss making public sector banks as on 31.03.2018. As per
Average per branch business of public sector banks is Annexure-I except TWO Banks (Indian Bank and Vijaya Bank)
Rs.195.10 Crs. BOB and BOI retain their position both in rest of the Banks bottom-line is badly affected on account
total business as well as average per branch business i.e., 3 of High Cost of Deposits, Overheads, Higher Provisions due
and 5 ranks. As branches are marketing outlets, if a bank is to increase in NPAs and also change in status of NPAs (from
having more number of branches normally business should Sub-standard to DA1 to DA3 or Loss Assets) etc. As per
be more due to customer interaction / contacts. Annexure-II, the branch network of these banks is also high.

To arrive the optimum usage of bank branch, per branch If bank is having more number of branches it is a greatest
business is the best indicator by comparing with industry advantage to the bank in mobilizing deposits and in sanction
average. Average per branch business of the branch / of loans and advances to their customers. Up-selling (selling
banking industry is one important factor, while identification of additional bank own products to their existing customers).

42 | 2019 | MARCH | BANKING FINANCE