The bank is seeking to reduce the number of branches by 600 by closing or merging loss-making branches by the end of March 2023, according to the copy of a document reviewed by Reuters.
It is the most drastic step the lender has taken to improve its finances and will be followed by the sale of non-essential assets such as property, said a government source who did not wish to be named.
The closure of branches has not previously been reported. The more than 100-year-old lender currently has a network of 4,594 branches.
Since then, all lenders except the Central Bank have improved their financial health and removed themselves from RBI’s PCA list.
“The bank is struggling to exit RBI’s PCA due to poor earnings performance since 2017 and to utilize labor more effectively and efficiently,” said the May 4 document sent by the headquarters to other branches and departments, detailing the rationale for the move.
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A bank under PCA is subject to greater scrutiny by the regulator and may face lending and deposit restrictions, branch expansion and hiring freezes and other limitations on borrowing.
The RBI introduced the standards at a time when Indian lenders were struggling with record levels of degraded assets, prompting the RBI to tighten the thresholds.
“The decision of the Central Bank of India is in line with the established strategy of reducing deficit assets on its books,” the government official said.
In the December quarter, the lender reported a profit of 2.82 billion Indian rupees ($37.1 million) against 1.66 billion rupees a year earlier in the same quarter.
However, its gross non-performing asset ratio (GNPA) remains high compared to its peers, standing at 15.16% at the end of December.
The bank was placed under the PCA in June 2017 and in that quarter the lender had incurred a loss of Rs 7.50 billion while its GNPA ratio was 17.27%. (Reuters)