Money & Banking

Bank branches and ATMs expansion hit slow lane in FY18 and FY19

K Ram Kumar Mumbai | Updated on September 19, 2019

Banks in India added fewer branches and consolidated their ATMs network in the last two years even as digital banking transactions gained traction. In fact, branch expansion in FY2018 and FY2019 was the slowest in the last 10 years.

In FY2018 and FY2019, banks expanded their branch network by 1,804 and 2,958, respectively, as per the Reserve Bank of India's Handbook of Statistics on the Indian Economy (2018-19).

In the last decade , the highest branch addition took place in FY2014, when 11,412 branches were opened .

Banks de-grew their ATMs network in the last two years, with the number of ATMs coming down by 1,302 and 4,856 in FY2018 and FY2019 respectively, after continuously growing it in the preceding eight years. In the last 10 years, the highest ATMs addition happened in FY2014 when 46,041 ATMs were opened by banks.

As at March-end 2019, the number of bank branches and ATMs stood at 1,45,426 (1,42,468 as at March-end 2018) and 2,02,196 (2,07,052), respectively. According to a BCG report, which was released at the recent FICCI-IBA Conference, two-thirds of all banking financial transactions are now digital. Branch and ATM transactions are declining every year.

That the banking transactions on digital channels -- net banking, mobile banking, unified payment interface, point of sale terminal, etc -- are growing by leaps and bounds is underscored by the fact that such transactions witnessed a 94 per cent year-on-year jump in FY2019. On the other hand, total branch based transactions -- cheque, cash, national electronic funds transfer -- nudged up 5 per cent.

Led by public sector banks (PSBs), branch growth in India has almost come to a halt, the report said. Besides digitisation of banking transactions, bankers also attribute the fewer branch additions to almost half of the PSBs being under the RBI's prompt corrective action (PCA) framework.

As part of the corrective action under PCA, which seeks to nurse banks with high net non-performing assets and negative return on assets back to health, branch expansion is restricted. The BCG report said digitisation, automation and newer branch formats resulted in lower branch staff per branch across all geographies.

The number of staff per metro branch has come down to 9.8 in FY2019 from 10 in the previous financial year. The corresponding staff numbers in the case of urban branches is 9.7 (9.8 in FY2018); semi-urban branches is 6.8 (7) and rural branches is 5.5 (5.7).

Published on September 19, 2019

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