Central Bank of India is planning to shut around 600 of its branches in a bid to cut costs, Reuters reported citing sources and documents.
The government-backed lender aims to either shut down or merge loss-making branches by the end of March 2023, the news agency said citing a document.
According to a government source, this is the most drastic step Central Bank has taken to improve its finances.
Following the reduction in the branch network, the lender will divest non-core assets such as real estate, the source added.
Currently, Central Bank operates a network of 4,594 branches.
In 2017, the Reserve Bank of India placed Central Bank along with some other lenders under prompt corrective action (PCA) for poor financial metrics.
Banks under PCA are subject to greater regulatory scrutiny by the regulator, which could restrict the banks’ lending, deposit, expansion and hiring among other activities.
Notably, other than Central Bank, all the lenders have managed to 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 utilise manpower in a more efficient and effective manner,” the document sent out by the headquarters to other branches and departments read.
“Central bank of India’s move is in line with the set strategy of lowering loss-making assets in its books,” the government official noted.
In June 2021, the Indian government selected Central Bank along with the Indian Overseas Bank for potential divestment.