Central Bank Of India To Shut 600 Branches By March 2023, Says Report

Central Bank of India, which is more than 100-year-old, currently has a network of 4,594 branches across the country

New Delhi: In a bid to improve financial condition of Central Bank of India, the public sector lender plans to shut 13 per cent of its branches, quoting sources news agency Reuters reported on Thursday.

The public sector commercial bank is looking to reduce about 600 branches which were under tremendous financial stress. The management will either shut or merge the loss-making branches by the end of March 2023, according to the report.

A government source, who didn’t want to be identified, said this is the most drastic step the bank has taken to improve its finances. The report said be this will be followed by the sale of non-core assets such as real estate.

Currently, Central Bank of India, which is more than 100-year-old, has a network of 4,594 branches across the country. However, the closure of the branches has not been reported earlier.

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

All the lenders, except Central Bank of India, have improved their financial health and come off RBI’s PCA list.

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

Central Bank of India, however, did not reply to Reuter’s emails seeking comment.

A bank that comes under PCA faces greater scrutiny by the RBI. It also faces restrictions on lending and deposit, branch expansion, hiring freezes, and other limitations on borrowings.

The baking regulator introduced these guidelines at a time when the lenders were battling record levels of NPAs, prompting the RBI to tighten thresholds.

“Central bank of India’s move is in line with the set strategy of lowering loss-making assets in its books,” the government official said.

In the December quarter, the lender reported a profit of Rs 282 crore against Rs 166 crore in the same quarter of the previous year.

The bank’s gross non-performing assets (GNPA) ratio remains high compared with its peers at 15.16 per cent as of the end of December.