SBI to chalk out circle-wise branch rationalisation plan

State Bank India (SBI), the country’s largest lender, will draft a circle-wise plan to rationalise the group’s branch network. The plan, which includes relocation of bank branches, is in view of the proposed merger of associate banks with SBI.

Work on this rationalisation had begun about a year ago, even before the merger decisions were taken. The expansion of alternate platforms, including digital banking channels, has made SBI rethink on the location of branches. About one-fourth of the network would be impacted by this exercise, said a senior SBI bank executive.

While the bank has adequate presence in metropolitan and large cities, there is scope for covering remote and under-served areas.

At present, the SBI Group has 22,000 branches, of which SBI alone has 16,800 units.

The bank has been going slow in expanding its branch network. It added 1,053 branches in FY14. The next year, the number of additions was only 464. In FY16, the bank added 451 branches.

The SBI executive cited above said the bank operates through 14 circles, while associate banks have strong presence in states where they are headquartered.

For instance, State Bank of Jaipur and Bikaner (SBBJ) has robust network in Rajasthan and the SBI Group would capitalise on this. It would merge SBI’s branches with associate banks where the latter have strong presence.

The five associate banks to be merged are — SBBJ, State Bank of Patiala, State Bank of Mysore and State Bank of Hyderabad. The five associate banks have a market share around 5.3 per cent in deposits and 5.33 per cent in advances at the end of March 2016. Their net profit was Rs 1,368.7 crore at the end of March 2016.

State Bank of India