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Public banks take lead in government's austerity drive

The public sector banks are on a strict austerity drive, thanks to the finance ministry directive asking them to bring down expenditure.

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The public sector banks are on a strict austerity drive, thanks to the finance ministry directive asking them to bring down expenditure.

As part of belt-tightening measures, the PSU banks are staying away from 5-star hotels, cutting down on telephone bills, and rationalising on branch expansions and ATMs so that the operating expenses are down and their margins are not eaten away by the pile-up of bad debt.

And, what more?

State Bank of India (SBI) has now got glow signs with automatic timers so that lights on office premises can turn off when not required. Andhra Bank chairman travels only by budget airlines as a matter of policy. Overseas travels are cut down by half and meetings generally have to be held in head office; but only when parliament is in session banks can call meetings in Delhi so that ministry officials can participate.

Several banks have also put overseas expansions on hold.

Arundhati Bhattacharya, chairman, State Bank of India, told dna, "Our operating expenses are growing at the rate of 3-7%, down from a 20% year-on-year growth in expenses. ATM and branch rationalisation are some of the measures that the bank is already putting in ever since I took over a year and a half back."

SBI did not open any ATMs in the last one year while many have been outsourced. The largest bank in the country has also merged some of its existing branches. In 2014, 909 branches were set up but this was after shutting down branches in some locations or relocating some to rationalise the operations.

During last quarter, banks stayed away from 5-star hotels in the city in favour of suburban locations. Central Bank of India held their financial results news conference at their training college in Vile Parle. The usual venue for the bank used to be Trident in Nariman Point, next to its corporate head office at Chandramukhi building. Andhra Bank also chose to hold its news conference at YB Chawan Centre, leaving its usual venue at the Taj Colaba.

CVR Rajendran, chairman and managing director, Andhra Bank, told dna, "As a matter of policy, I only travel by budget airlines. So the executive class and business class does not impact me."

Vijayalaksmi Iyer, chairman and managing director, Bank of India, told dna, "We have shifted 265 ATMs to areas where there is more traffic and branches rationalisation is also part of our austerity drive. We are also rationalising cash in the ATMs. Earlier, expenses on cash management formed 3-4% of the total ATM maintenance cost, which has now come down to 0.5%."

Finance ministry officials too are regularly holding video conferences with bank officials and avoiding travel.

With higher bad loans on their books, banks hope that bringing down the operating expenses will help them to stay profitable.

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