Oriental Bank of Commerce (OBC) plans to moderate its branch expansion plan this fiscal in the wake of the current economic slowdown. The public sector lender will look to open only about 125-150 branches this fiscal, S.L. Bansal, Chairman & Managing Director of the bank, told Business Line.
In the past two fiscals, OBC opened as many as 375 branches, which had helped it improve its CASA (current account, savings account) base and explore more business. The branch expansion this fiscal would be carried out with a special focus on unbanked areas for greater financial inclusion, Bansal said.
Branch expansion is a function of availability of business opportunities. If the bank desires good growth in CASA, more and more brick-and-mortar branches would be required, Bansal pointed out. Cost benefit analyses would be carried out while planning on branch expansion, he added. Currently, OBC has 3,600 delivery channels with 2,025 branches and 1,525 automated teller machines.
Due to the economic slowdown and lesser demand from corporates, fee-based income had been impacted, he said.
To cope with this challenge, OBC rationalised its service charges in line with its peers. This helped the credit-related, fee-based income grow 18 per cent in the first quarter this fiscal, Bansal said.
OBC is also relying on its own joint venture life insurance company to bolster its income.
Another component of its fee-based incomes is recovery in technically written-off accounts. Last year, OBC recovered Rs 550 crore in this segment. “We expect to continue this trend in current year as well,” Bansal said.
Bansal expressed confidence that the present situation in the economy will further improve on the back of recent measures taken by the Government.
No job cuts
On how the slowdown was impacting employee morale in the bank, Bansal said bank employees understood market dynamics better these days.
“From my experience, I can share that present day employees show high degree of professionalism and dynamism in their functioning and respond to the market needs which will help the bank in the long term,” he said.
He also ruled out any move to reduce workforce as it was not a viable solution.
“It is certainly not an option that public sector banks are looking at. The issue of excess manpower is now a rarity. Skilling, re-skilling and optimum utilisation of manpower is the order of the day,” he said.
Banks have taken other measures for reducing costs like shedding of bulk deposits.
OBC reduced its bulk deposits by 24.73 per cent on a year-on-year basis and this had helped improve net interest margin to 2.9 per cent as of the first quarter this fiscal, Bansal said.
srivats.kr@thehindu.co.in