Mumbai-based Bank of India will shut down 400 ATMs in its cost-cutting drive and may take a decision on shutting 300 more ATMs by the end of February.
Mumbai-based Bank of India will shut down 400 ATMs in its cost-cutting drive and may take a decision on shutting 300 more ATMs by the end of February. According to media reports, the bank is deliberating upon customer requirements, usage pattern and location before deciding to close down the ATM.
In April, the bank shut down 90 ATMs. The Bank of India is currently in hot water as the Reserve Bank of India has initiated a prompt corrective action against it, a move that will place various restrictions on the lender, including on fresh loans and dividend distribution due to high bad loans.
Bank’s asset quality has worsened with high gross non-performing assets (NPAs). At the end of March 2017, its total NPA stood at 13.22% as against 13.07% in the previous year. Net NPAs, however, improved to 6.90% from 7.79%, yet it continues to worry the central bank. For the second quarter ended September 2017-18, asset quality improved as gross NPAs declined marginally to 12.62% of gross advances, from 13.45% a year ago.
In a filing to stock exchanges, BoI said Reserve Bank of India has placed it under Prompt Corrective Action Framework, consequent to the onsite inspection under the risk-based supervision model carried out for the year ended March 2017.
“This is in view of high net NPA, insufficient CET1 Capital and negative ROA (return on asset) for two consequent years. This action will contribute to the overall improvement in risk management, asset quality, profitability, efficiency, etc of the bank,” BoI said.
According to PCA framework, banks are assessed on three grounds– asset quality, profitability and capital ratios. Not meeting the requirements in any of these parameters could lead to RBI action on banks. The actions could include stricter norms for lending, branch expansion, management change and asset reduction. The RBI has tightened the thresholds — for capital ratios, NPLs, profitability and leverage – at which banks enter the PCA framework.