Central Bank Of India Will Shut Down 600 Branches Across India To Save Money: 13% Branches Will Cease To Exist!

Central Bank of India, a state-owned commercial bank, is planning to close 13% of its branches with the aim of improving its financial health, which has been under pressure for some years, as per sources

Central Bank of India is reducing the number of branches

The bank is looking to reduce the number of branches by 600 by either shutting them down or merging the branches that are making losses by the end of March 2023.

This is the most extreme step taken by the lender to improve its finances and will be followed by the sale of non-core assets such as real estate, said a government source who asked to remain anonymous.

The closure of the branches had not been reported before. The over 100-year-old lender has a network of 4,594 branches as of right now.

Central Bank was put under RBI’s PCA

The Central Bank along with a cluster of other lenders was put under RBI’s prompt corrective action (PCA) in 2017 after the regulator found some state-run lenders were in breach of its rules on regulatory capital, bad loans, and leverage ratios.

Since then all the lenders other than Central Bank have improved their financial health and come off RBI’s PCA list.

“The bank is struggling to come out of PCA of RBI due to poor performance on profit since 2017 and to utilize manpower in a more efficient and effective manner,” the document dated May 4 sent to the headquarters to other branches and departments said, detailing the rationale behind the move.

A bank under PCA faces a greater level of scrutiny by the regulator and might face lending and deposit restrictions, branch expansion and hiring freezes, and other limitations on borrowings.

The RBI introduced these rules at a time when Indian lenders were fighting extremely high levels of soured assets, the RBI to tighten thresholds.

In the December quarter, the lender reported a profit of 2.82 billion Indian rupees ($37.1 million) as compared to the 1.66 billion rupees in the previous year in the same quarter.

The gross non-performing assets (GNPA) ratio has stayed high compared with its peers, however, standing at 15.16% at the end of December.

The bank was put under the PCA framework in June 2017 and in that quarter the lender had registered a loss of 7.50 billion rupees while its GNPA ratio was at 17.27%.