ICICI Bank has identified 100 branches of the erstwhile Bank of Madura (BoM) to undertake only priority sector lending. These branches have collectively posted a loss of Rs 4-5 crore and ICICI Bank wants to bring these branches back into the black.
H N Sinor, managing director of the bank, said: "These 100 branches will focus on priority sector lending. They will concentrate on self-help groups for women and traders and will operate as a bank within the bank focusing at the bottom of the pyramid."
Explaining the rationale behind the move, Sinor said the branches collectively made a loss of around Rs 4 to 5 crore.
He said, "The focus now is to convert these loss-making branches into profit-making ones. The bank is looking at better lending opportunities and reducing transaction costs through low-cost technology."
The bank is changing the infotech platform of BoM branches to Finnacle. However, the 100 rural branches will be connected to the bank's centralised platform through some other low-prices software. Currently, the bank is connecting two to three branches to Finnacle every day.
BoM had around 260 branches at the time of the merger. "The first 100 branches, which will work on Finnacle, cover around 75 per cent of the business volume. We are prioritising these branches depending on the volume of business they generate. By December, we will convert the platforms of about 150 branches, which cover 94 per cent of the business."
Before the merger, the average deposits of a branch of ICICI Bank was Rs 165 crore. After the merger, it has now come down to Rs 65 crore. "The top 75 to 100 branches can start giving a resource base of an additional Rs 50 to Rs 100 crore per branch. This will be the focus of the bank in third- and fourth-quarters," Sinor said.
When asked whether ICICI Bank had paid too high a price for the takeover, Sinor said: "If a return on investment is between 18 per cent and 20 per cent, then it can be a good investment. The returns will now get accelerated."
