Page 43 - Banking Finance March 2019

ARTICLE

While sanctioning loans to their customers, branches always Analysis
prefer to sanction loans to their customers who are located
Present scenario in banking industry majority of the
near to the branch. In such a scenario, recovery efforts
customers visit the branch to avail retail loan or MSME
should be more due to proximity of distance from branch to Loans or for using the locker services etc. If CD Ratio is
the customer location, thereby slippage of standard to NPAs more, it reveals that customers are using branches for
will not arise. When the banks are incurring high costs on advances. Strategy to be adopted by these banks is to open
RTL, maximum benefits of the branches can be explored i.e. central processing centres to process the advances instead
by increase in deposits portfolio of the branch and close
of processing at the branch premises. Thereby pressure on
monitoring of advances sanctioned, especially in case of rural
the branches will come down by establishment of CPCs for
and semi-urban branches where penetration of digital
advances. And branches can give more focus on educating
banking services is low.
the existing customers to utilize digital banking system /
alternative delivery channels for other products of the bank
As per Annexure-I, Top five banks CD Ratio for the
which can further decrease load on branches.
financial year ending 2018 is as follows:
Name of the Bank Credit / Deposit Ratio (%) About Third Cost
Syndicate Bank 81.88 Main source of revenue to the Banks is Yield on Advances
Andhra Bank 79.08 followed by Exchange on remittances, forex transactions,
Commission on various services offered by the bank branches
Indian Bank 78.12
and Discount on Trade Bills (Usance and Sight Bills). The
Allahabad Bank 77.92
following is Schedule 16 i.e., Operating Expenses of State
Indian Overseas Bank 77.15 Bank of India.

Operating Expenses
(000s omitted)
Year Ended Year Ended
31.03.2018 31,03,2017
(Current Year) (Previous Year)
I. Payments to and provisions for employees 35410,62,16 35691,20,50
II. Rent, taxes and lighting 5392,58,19 5270,90,67
III. Printing & Stationery 603,44,87 544,30,58
IV. Advertisement and publicity 1997,56,23 600,28,87
V. (a) Depreciation on Fixed Assets (other than Leased Assets) 3094,39,40 2911,03,48
(b) Depreciation on Leased Assets 10,67,70 3,64,95
V1. Directors' fees, allowances and expenses 6,53,54 9,52,63
VII. Auditors' fees and expenses (including branch auditors' fees and expenses) 296,38,24 311,82,32
VIII. Law charges 501,90,13 414,86,73
IX. Postages, Telegrams, Telephones, etc. 1031,4%33 975,421,05
X. Repairs and maintenance 971,89,71 870,95,63
XI. Insurance 2774,59,09 2479,26,16
XII. Other Operating Expenses relating to Credit Card Operations 1155,03,28 1655,63,91
XIII, Other Operating Expenses relating to Insurance Business 29377,02,59 24228,69,27
XIV. Other Expenditure 13530,22,81 11322,28/14
TOTAL 96154,37,27 87289,88,19

BANKING FINANCE | MARCH | 2019 | 43