Indian Overseas Bank is consistently reporting improved operating profits quarter over quarter and one of the contributing factor is decline in number of loss incurring branches (LIB).
The continuous follow up from the administrative layers and efforts taken at the branch level has helped IOB to reduce the number of loss incurring branches from 742 in March 2015 to 718 in Mar 2016 to 536 in Mar 2017 and further brought down to 371 branches in Mar 2018, and 157 as on Mar 2019.
The reduction in the number of LIBs can be attributed to the conscious and continuous efforts taken by the Bank towards reduction of operating expenditure and improving overall operational efficiency. As of March’19 most of the IOB branches stand self-sustaining. The percentage of loss incurring branches has drastically reduced from the position of 22% of total Branches in 2015 to less than 5% in March’19.
Specific directions are given to LIBs on focused activities/functions (e.g. improvement in CASA share, NPA reduction, directed lending etc) to come out of LIB. The steps taken include rationalization of branches (Branch rationalization involves merger/closure of the branches without affecting the customer service), containing of administrative expenses by way of reduced rent, electricity, space audit, redeployment of staff etc.
The bank would continue to focus closely on the loss incurring branches towards reporting a profitable trend. Analysis is being carried out on all the factors towards overall profitability which includes staff optimization, strict control on overhead expenses, higher focus on recovery initiatives and camps, comparison of business level with peer bank branches in the command area.
Higher thrust on Retail & MSME lending is given to improve the yield apart from diversification of the risk. Branches incurring loss due to higher NPA are advised to focus more on recovery apart from incremental lending to thrust areas of MSME and Retail. While commenting about LIB, IOB’s Executive Director, A.K.Srivastava said “Banks’ focus is to achieve profitability from grass root level. Reduction of LIB is a testimony to this effort”.