Union bank of India, a leading public sector bank, has slowed down its expansion plans due to inadequate trained staff. The bank was planning to open up 500 new branches during the current fiscal.
During the last two years the bank has opened 310 branches across India. Since April it has appended its branch network by 200 branches. The bank, unlike earlier, is now planning to add only a few branches to its existing 2500 branches.
The bank's chairman and managing director, MV Nair said "These are difficult times. So, we want to save cost. In addition, though we are hiring, it takes time before the staff is properly trained to be posted at new branches."
The bank's operating expenses increased 35 percent, from Rs 416 crore in June 2008 to 543 crore in June 2009. This was mainly due to the implementation of a project Nav Nirman, launched by Nair to place the bank among top three public sector banks by 2012.
The bank, based in Mumbai, was contemplating major expansion plans. Apart from UBI, other banks planning to expand include IDBI, SBI and ICICI bank. However, these banks are proceeding with the plans.
An IDBI executive said that recruitments were less costly at that time and it would be good to enter into property lease agreements. IDBI plans to add 200 branches between April and December this year and it will open the remaining branches in the fourth quarter that is Jan- Mar 2010.
ICICI, which has obtained the approval of RBI for setting up 580 new branches in 2009-10, is also trying to lower costs while going ahead with its expansion plans. According to the management the new brances would help the bank to get more CASA (current account saving account) deposits.