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New Delhi-based public sector lender Punjab National Bank is planning to rationalise its branch network by shutting down or relocating up to 300 loss-making branches over the next 12 months. Sunil Mehta, managing director and chief executive, said turning loss-making branches into profit-making units by tweaking the business strategy was priority. The bank has formed a group of senior officials to do a detailed study and flesh out strategies for branch network rationalisation. The bank will reckon on business prospects, the surrounding competitive landscape, and the availability of the bank’s business correspondent (BC) network before deciding on the matter. The bank had 6,937 branches at the end of the last financial year. It added 178 branches to its network. In the six months of FY18, it added three more, taking the tally to 6,940 branches by September. PNB officials said digital banking had gathered pace and a substantial expansion of the BC network was helping the bank to enhance its outreach. This has tempered the requirement of a large-scale expansion of the network.
PNB, with a customer base of 100 million, has 9,753 ATMs and 8,224 BC outlets as of September.Mehta said the Reserve Bank of India’s (RBI’s) new policy on outlets gave flexibility in locating branches and outlets. The RBI’s banking outlet policy, revised in May, gives banks more leeway in opening, relocating, and closing down branches. The focus is reaching customers to provide financial services and that could be done through brick-and-mortar branches as well business correspondent (BC) outlets. Banks may shift, merge or close all “banking outlets” (except rural outlets and sole semi-urban outlets) at their discretion. A merger, closure, or shifting any rural banking outlet as well as a sole semi-urban banking outlet will require the approval of the district consultative committee or the district level review committee. However, converting a rural or sole semi-urban banking outlet into a branch or vice-versa will not require such approval, according to RBI policy. But in all this, banks must ensure that the banking needs of the centre continue to be met.