Banks added only 1,383 branches in FY2021, the lowest in a decade, as banking via alternative channels such as digital and Business Correspondents (BCs) gained traction amid the Covid-19 pandemic.
Banks had expanded their branch network by 7,728 in FY20, according to RBI data.
Another reason for the fewer branch additions in FY21 was that five large public sector banks (PSBs) — Bank of Baroda, Punjab National Bank, Canara Bank, Union Bank of India and Indian Bank — went in for branch consolidation following amalgamation of select PSBs with them.
As at March-end 2021, the network of offices of scheduled commercial banks increased to 1,54,485 from 1,53,102 as at March-end 2020, as per RBI data.
Given that alternative banking channels are gaining popularity as they offer the convenience of banking at customers’ fingertips (mobile and internet banking) as well as doorstep banking via BCs, Banks’ will go slow on expansion of brick-and-mortar branches to save on costs, say industry experts.
EASE of banking
The latest EASE (Enhanced Access and Service Excellence) report underscored that through improvements in digital channels, most branch-based services are now accessible to the customers from home and mobile, including in local languages.
This has enabled convenient access to banking services, including during the nationwide lockdown imposed due to the pandemic.
“Encouraged by the convenience and quality of experience on these channels, many PSB customers have increasingly adopted them for day-to-day banking needs. “Seventy-six per cent of all the financial transactions across PSBs are now undertaken through home and mobile channels such as mobile banking application, internet banking platform, call centre, etc,” the report said.
Besides augmenting the broad-based use of technology, the Covid-19 pandemic has fuelled the proliferation of digital modes of payment, propelling the country towards ‘less-cash’ alternatives.
Mobile banking
“Bank’s mobile application will be the primary interface for customers. Apart from a few services which are best delivered at a branch, customers will increasingly be using mobile phones for meeting banking requirements.
“The endeavour is to have a right mix of physical and digital infrastructure. The Bank is looking at significantly expanding its presence across locations through new BCs and lighter formats,” Sanjiv Chadha, MD & CEO, Bank of Baroda, said in the FY21 annual report.
As part of the integration of Vijaya Bank and Dena Bank with BoB, the latter merged or rationalised 1,310 branches and 1,135 ATMs during FY21.
Rajkiran Rai G, MD & CEO, Union Bank of India (UBI), highlighted the cost synergy that can be achieved by way of optimisation of physical distribution of network through branch & ATM network merger/ rationalisation, employee alignment, among others, in the Bank’s annual report.
Following the amalgamation of Andhra Bank and Corporation Bank with UBI, the latter merged 277 branches in FY21.
