Oriental Bank of Commerce plans to open 79 branches thru restructuring exercise

The branch network re-structuring exercise, which Oriental Bank of Commerce started last year, has given it a scope to open 79 branches across India, according to a top official of the bank.

As part of the exercise, the bank had last year hoped to club a redundant branch with other branches.

“We use those licences to areas where we don't exist. By doing that, we have been able to get some business out of those areas, which we were not able to access through our earlier set-up,” Mr Nagesh Pydah, Chairman and Managing Director, Oriental Bank of Commerce, told Business Line.

One such branch was opened at Malleswaram in Bangalore. In an area where practically most banks have already located their branches, he hoped to “enjoy the last mover advantage”, and create a differentiation through customer service.

On a pan-India basis, the bank is looking at “opening about 79 branches only out of the re-jig process. It's a good opportunity for us. In some places, the results have been remarkable,” he said.

The bank targets a business of Rs 30 crore-35 crore a year from these branches.

“If they are able to record business of Rs 25 crore in the first year, it is good enough for us,” explained Mr Pydah.

This year, Oriental Bank of Commerce has about 96 pending licences, which he said would take the total branch network of the bank to over 1,800 branches. The RBI is very clear that average balance of Rs 1 lakh would be one rate, and above that should be non-discriminatory rates.

The idea is to encourage innovation and competition, and that savings bank deposit should also be a good source of liability management for banks and also reward the savings bank customers adequately.

I don't expect each to be significantly high.

Before savings bank rates touched the current levels, they were at about 6 per cent.

I have a feeling that they may again slowly crawl up to 6 per cent.

An exercise has to be done on the composition of savings bank account. We find that close to 25 per cent of our deposits are in the sub-Rs 1 lakh category and 75 per cent in the over Rs 1 lakh category.

The stickiness of the portfolio is about 65-70 per cent, which is very good.

Today people who are maintaining savings bank account would stand to gain.

For a bank of my size, we expect that additional cost would be about Rs 28 crore annually.

Today, quite a lot of services are offered free to customers.

There will be a system that will regulate the free services.

Earlier, the cost of the free services was capable of being absorbed because of the low interest rate that we were paying.

Now, we have to be selective in offering the services.