Foreign lender HSBC has decided to shut down 24 branches out of 50 in the country citing that more customers are availing banking services though the digital medium rather than going to branches.
The decision to close the branches, which will happen in a phased manner over the next few months, will impact 1 per cent of the bank’s total employees in the country, which is about 33,000. The bank said redeployment opportunities would be accorded to some of the affected employees.
“Following a strategic review of its Retail Banking and Wealth Management (RBWM) business in India, HSBC on Thursday announced changes to its retail branch network in the country. This change reflects changes in customer behaviour, who are increasingly using digital channels for banking,” the British lender said in a statement. The move will reduce its presence to 14 cities from 29 cities.
The region which will be most impacted due to this move is Kolkata, where 5 branches will be shut down. Two branches will be shut down in New Delhi and one each in Mumbai and Chennai.
“Customer expectations are changing rapidly and we need to adapt accordingly,” said Stuart P. Milne, Group General Manager and Chief Executive Officer, HSBC India.
India is the fourth largest contributor to HSBC Group, which recorded a profit before tax of $606 million in 2015. The lender said it would continue to invest in retail and wealth management business and would soon be announcing an expanded proposition to cater to its top tier clients.
“India is a priority market for HSBC and we will continue to invest to achieve sustainable growth by supporting the needs of our customers in Retail Banking and Wealth Management, Global Banking and Markets, and Commercial Banking, businesses where we have scale and a highly differentiated proposition,” Mr. Milne added.
The branches which are closed, account for less than 10 per cent of HSBC’s retail customer base in India. HSBC does not expect any additional branch consolidation beyond that being announced today, the statement said.
Last week, Royal Bank of Scotland (RBS) said it had started to close down all its 10 retail branches in India.
Reserve Bank of India had asked foreign banks to incorporate locally, that is, bring them under a subsidiary. However, none of the large foreign banks in India had shown interest in that proposal. RBI had said that banks which operate through a subsidiary route are free to open as many branches as other domestic banks, but for others, the branch licensing process would be restricted.
Standard Chartered is the largest foreign bank in India in terms of branch presence, with 100 branches. Citigroup, the third largest foreign lender, has 45 branches.
Since foreign banks need RBI approval to set up new branches and are not allowed to sell branches or assets without regulatory approval, closure of branches will mean surrendering branch licences to the banking regulator.
“A key priority is the fair treatment of our staff and we will do everything we can to assist affected employees,” a bank spokesperson said.
The closure will impact 1% of the bank’s total employees in the country, which is about 33,000
