Banks are focusing on controlling overheads, ie, controllable costs in addition to recovery of non-performing asset (NPAs) to improve their bottom line. Age of alternate delivery channels in Indian banking system has completed one and half decade. Most of the customers have migrated from branch banking to alternate delivery channels. Hence, there is scope to control overheads (Rent, Taxes and Lighting) by better utilisation of alternate delivery channels instead of branch banking model / channel.

One of the objectives of the introduction of a number of alternate delivery channels in banking is to reduce the transaction cost of bank transactions in addition to offering customer convenience. Central Processing Centres (CPCs) became units for processing various bank products, and as a result, it reduced footfalls of bank customers at bank branches. The banking system is slowly getting classified into Marketing of bank products and Processing of bank products. The marketing function is being handled by branches and operations / processing functions by CPCs and other alternate delivery channels. Thus, banks’ primary channel, ie, branches are becoming purely marketing / selling outlets to sell various bank products including cross-selling of various third party financial products and CPCs are taking care of 75 percent to 80 percent of workload ie, operations / processing functions of branches particularly at Tier-I, Tier-II and Tier-III cities / towns. However, in rural areas the branch continues to be an important channel to sell and processing bank products.

Data analysis

As per annexure-I, average per branch business is the highest in IDBI Bank (INR 219.03 crores) followed by SBI (INR 207.07 crores), BOB (INR 186.34 crores), UBI (INR 167.95 crores), BOI (INR 166.26 crores) whereas the lowest per branch business is in United Bank of India (INR 96.27 crores) with average per branch business of PSBs being INR 195.10 crores. To arrive at the optimum usage of the bank branch, per branch business is the best indicator when compared with the industry average. Average per branch business of the branch / banking industry is an important criterion for identification of new branch premises; this benchmark can be utilised for allocating budgets for the proposed branch.

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