MUMBAI, April 9: The Calcutta-based Allahabad Bank has decided to close eight of its 12 zonal offices in a restructuring effort based on Arthur Andersen's report. The state-run bank's board will meet in the third week of April to formally adopt a resolution accepting the consultancy firm's recommendations.The bank is also redeploying a sizable section of its work force. "The management has already held preliminary discussions with the trade unions," sources said.
In another move, the bank has decided that all its branches will not be involved in loan disbursals. "Credit is a specialised job, and only dedicated branches will disburse it, while other branches will continue to accept deposits," according to a source.
This will mean a major shift in the business strategy of public-sector banks. In effect, a majority of bank branches will be converted into deposit-taking branches, while only a few dedicated branches will take have an exposure to advances. Senior bankers have hailed the policy as a "step inthe right direction".
According to sources, Allahabad Bank will now have four zonal offices -- in Delhi, Mumbai, Calcutta and Lucknow -- manned by general managers. The sanctioning power of general managers has been increased five times -- from a paltry Rs 1 crore to Rs 5 crore.
The regional offices will be headed by assistant general managers, who will be empowered to sanction loans up to Rs 1 crore, up from the earlier limit of Rs 30 lakh.
Following Arthur Andersen's recommendations, Allahabad Bank has also embarked on a computerisation plan, backed by a World Bank loan. "This will call for redeployment of a sizable section of employees, which the unions have accepted," sources said. The bank employs 23,000-and-odd staff spread over 1,900 branches. "The prime objective was to raise profitability in wake of the public issue," sources said. The bank has also revised agency arrangements abroad to streamline its overseas business.
Allahabad Bank expects to post an operating profit of Rs 200 crore in1997-98. In the previous fiscal, it had posted a net profit of Rs 64.3 crore, up from Rs 5.62 crore in 1995-96 when the bank had bounced into the black after a gap of three years.
Armed with a balance sheet showing a three-year profit record, the bank is planning to tap the capital market in the current fiscal.
Its net non-performing assets came down marginally from 16 per cent (Rs 752.12 crore) in 1995-96 to 14.84 per cent (Rs 721.79 crore) in 1996-97. "It will come down substantally last year as the recovery was quite good," soruces said. The bank's capital adequacy was pegged at 10.57 per cent in March 1997.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
