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How sub-branches are helping banks cut costs in times of austerity

  • Published at 12:03 am November 20th, 2020
bank sub-branch
Customers getting banking service at a sub-branch of NRBC Bank Courtesy

Sub-branches are playing a vital role in bringing down operational costs at a time when cost-cutting has become very essential

Banks have turned to open sub-branches instead of branches as part of their efforts to rationalise operational costs as pandemic bites into their balance sheets.

In December 2018, the central bank allowed banks to operate “sub-branch” to bring unbanked and underprivileged people under the banking network. 

As of September 30, 37 banks have got permission from the Bangladesh Bank to open sub-branches, and 30 are now running a total of 1,275 sub-branches in rural and industrial areas, according to data from the BB.

And 69 per cent of the sub-branches were opened between January to September. 

Besides, nine banks including the four state-run lenders, Pubali and Uttara Bank took the BB’s permission during the period to roll out sub-branches. 

Such branches are for providing limited scale services and will be operated with limited expenditure under the supervision of a nearby full-fledged branch of a bank, said BB Executive Director Abu Farah Md Naser, who was involved in drafting the guidelines for sub-branches.

The sub-branches will not be more than 1,000 square feet and will be manned by at least two officers. They are not permitted to carry out any sort of foreign transaction.

Sub-branches are playing a vital role in bringing down operational costs at a time when cost-cutting has become very essential, said Parvez Tamal, chairman of NRB Commercial Bank, which is making the best use of this mode of delivering banking services to customers.

It takes Tk 60-70 lakh to open a branch but a sub-branch costs Tk 1.5-10 lakh. 

NRBC has 328 sub-branches, which is the highest, and 77 branches, according to Tamal.

Now, all types of banking services including loans applications are available online, so the need for full-fledged bank branches would come down in the upcoming days.

“We are not interested in increasing the number of branches but we will definitely ramp up our sub-branch roll-out,” Tamal added.

Dhaka Bank too is jumping on the sub-branch bandwagon with gusto.

“We want to open 20 to 25 more sub-branches next year,” said its Managing Director Emranul Huq, adding that the establishments would be littered across areas where factory workers reside. 

At present, it has 12 sub-branches.

It is very cost-effective as it requires less space, less manpower and fewer expenses, he added.

“It is a very innovative platform for banking,” said M Fakhrul Alam, MD of One Bank, which has 24 sub-branches.

The bank will not open any full-fledged branch from next year but will go for sub-branches. 

Banking via sub-branch was a new horizon after agent banking, said Bank Asia MD Md Arfan Ali.

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