The economic slowdown has compelled a leading financial services provider, GE Money India to close around 50% of its branches in the coming few months. The firm intends to shut down close to 170 branches spread across the nation.
Earlier the company had decided to increase its branch network to 250 by the year 2011 but due to the ongoing slowdown, which has mainly taken a toll over the country's retail lending business, the bank has decided on scaling down the number. This move will also affect a huge number of employees working these branches.
A senior executive with GE Money also confirmed the move and said that the firm is getting on to review its cost and spending at this time of crisis. Currently the firm has a loan portfolio of around Rs 5,000 crore that consist of residential mortgages and home and personal loans.
Recently many banks and financial institutions have also taken a move to cut down on their costs. Most of them have laid-off employees as a part of cost cutting.
In an email sent to ET, GE India mentioned: "The entire industry in India is currently facing very challenging conditions due to an increasing interest rates and delinquencies. The current market realities have made it necessary for us to reassess our business model. In the immediate term, we are focusing on reducing operating expenditures and improving operating efficiencies, as well as building a more focused business in terms of product offerings and consolidating in cities where we have a competitive advantage and scale."
Companies are resorting to such moves in order to keep their bottom lines intact amid crisis faced by the financial sector.
Earlier GE was considering several finance companies in India and abroad to sell off a majority stake in GE Money. Morgan Stanley was assigned the authority to find a strategic partner for the business. However there were no fruitful results and thereby GE Money was merged with GE Commercial Finance. This merger was a part of the internal restructuring of GE and aimed at the consolidation of operations as well boosting efficiencies of both firms under GE Capital.
GE Capital is one among the four major forays of GE. It has its sub-units named GE Aviation Financial Services, GE Energy Financial Services, GE Money and GE Treasury.