IOB's loss making branches down to 157 from peak of 742

The lender has focused Strongly on cost reduction, bank rationalisation and NPA recoveries; today, only 5% of its branches are loss making, compared with a peak of 22%

Indian Overseas Bank (IOB) has said it has brought down the number of loss incurring branches to 157 as on March 2019, from a peak of 742 in March 2015. This is the one of the key focus areas of the Bank as part of its turnaround plan.

IOB’s Executive Director, A K Srivastava said the bank's focus is to achieve profitability at grassroot level and that reduction in loss making branches stands testimony to this effort. The bank has been able to consistently pare the number of such branches from 742 in March 2015, to 718 in March 2016, to 536 in March 2017 and then to 371 branches in March 2018 and finally to 157 as on March 2019.

The reduction can be attributed to the efforts taken by the bank in controlling operating expenditure and improving overall efficiency, Srivastava added.

As of March 2019, most of IOB's branches stand self-sustaining. The percentage of loss making branches has drastically come down from 22 per cent of total branches in 2015 to less than five per cent in March 2019. Specific directions were given to loss incurring branches on focussed activities and functions such as improvement in CASA share, NPA reduction and directed lending in order to become profitable again. The steps taken include rationalisation of branches -- which involves merger or closure of a branch without affecting customer service -- containing administrative expenses by way of reduced rent, electricity, space audit, redeployment of staff, among other measures.

"Analysis is being carried out on all the factors towards overall profitability which includes staff optimization, strict control on overhead expenses, higher focus on recovery initiatives and camps, comparison of business level with peer bank branches in the command area," said Srivastava.

The bank added that higher thrust on retail & MSME lending is given to improve the yield, apart from diversifying the risk. Branches incurring losses due to higher NPA are advised to focus more on recovery apart from incremental lending to thrust areas of MSME and retail.

As on March 2015, number of branches were 3381, including administration office 171. This was brought down to 3,280, including 64 administration office by March 2019. Around 145 branches are either merged or closed.