Page 47 - Banking Finance March 2019

ARTICLE

Analysis Strategies to Control Rent, Taxes and

Per branch POS machines is more in Corporation bank, when Lighting (RTL) Costs
compare to other banks. Optimum utilization of debit /
Develop "Rent, Taxes and Lighting Policy" of the
credit cards is possible (particularly merchant transactions
/ transfer of funds from one account to other account) bank
through POS machines. Thereby savings bank deposit will All types of costs are to be controlled in the banking industry
increase and CASA deposits are beneficial to the bank. Per in order to increase the net profit of the bank. As spreads
branch POS machines is low in Punjab & Sind Bank. Banks of the banking business is decreasing on account of increase
are incurring more capital expenditure for providing POS in cost of deposits and decrease in yield on advances /
machines to the merchant establishments, better utilization investments and increase in NPAs. Control of every cost is
of POS machines by merchant establishments and increase essential, other-wise the rating of the banks will decrease
in CASA deposits are the indicators in implementation of and it is difficult to attract or mobilization of additional
Digital Banking. ATM vs. POS ratio is also high in Corporation capital through public issue. To control RTL costs, banks
Bank, but utility-wise it is very low. have to develop RTL Policy. All staff members from top
management to lower level management of the bank should
Analysis aware the importance of RTL policy. Policy guidelines of RTL
should be discussed by the bank management on monthly,
Number of transactions per POS machine is more in quarterly basis in review meetings of the regional / zonal /
Allahabad Bank and less in Corporation Bank, even though head office performance review meetings. Thereby RTL
corporation bank issued more POS machines to the costs can be reduced / controlled substantially.
merchant establishments. For effective / better utilization
of POS machines and Debit Cards, banks have to increase Review of the existing space of all
merchant establishments and MICRO ATM (Through POS
Machines). Amount transacted per POS machine for branch premises
March'18 is more in Central Bank of India and least in Alternate delivery channels were introduced in bank 15
Corporation Bank (even though number of POS per Branch years back, at present most of the bank customers are
/ ATM is more). habituated to use alternate delivery channels. Review of the
existing space is one of the important strategy i.e., reduce
Strategy to be used by the banks in this regard is to educate or to increase the branch space based on the customer foot
the customers about the benefits of using Debit cards i.e., falls, number of the transactions held at the branches,
not only for ATM purpose but also in different merchant business levels of the branch, demand deposits vs. time
establishments. As POS machines are low cost, when deposits, term loans vs. working capital loans, segmental
compare to the ATMs, if service charges on the merchant customers like retail or SME or corporate, educated
transactions are reduced, the volume of transactions customers or non-educated customers, number of alternate
through POS will increase, it not only increase in the CASA delivery channels linked to the branches, shifting of back-
deposits of the bank but also reduced the circulation of office operations to central processing centres, number of
money in the economy, thereby printing cost of currency will staff members, rent paid by the bank with prevailing market
reduce to the RBI. price, capital expenditure spent by the bank for interiors,

Other information
Following table shows important ratios of Branch vs. POS machines as on 31.03.18
PARAMETER HIGHER Ratio LOWER Ratio
Branches Vs. POS Ratio Corporation Bank 1:66.39 Punjab & Sind Bank 1:00.56
ATMs Vs. POS Corporation Bank 1:51.88 Punjab & Sind Bank 1:00.69
POS Vs. Number of Transactions Allahabad Bank 1:1342.19 Corporation Bank 1:20.58
POS Vs. Amount Disbursed Central Bank of India Rs.1.52 Millions Corporation Bank Rs.0.02 Millions

BANKING FINANCE | MARCH | 2019 | 47