Indian banks plan to close most branches

NEW DELHI: India’s central bank and major lenders are working on a plan to close most branches during the country’s lockdown, aiming to protect tens of thousands of employees from coronavirus, four sources said.

The world’s second most populous nation is still very much a cash society and banks have been exempted from a 21-day lockdown that began this week as they are considered an essential service.

Under the plan, there would likely be only one bank branch open every five kilometers in major cities, the sources said. Discussions about the closures have not been publicly revealed.

In rural areas, where 70 percent of Indians live and are often completely dependent on cash, banks will likely operate on alternate days with staff just focusing on the disbursal of welfare money to the poor, one of the sources said.

“The general guideline is that branch operation should largely be for villages just to take care of those people who are not familiar with digital transactions,” a senior banker with a state-run bank said.

“Informally, banks are talking to each other to cope up with a situation where there will be some rush for cash withdrawal because it is expected the government will provide cash for the poor directly into their accounts.”

Prime Minister Narendra Modi’s government on Thursday unveiled an economic stimulus package of 1.7 trillion Indian rupees ($22.6 billion) which will also include direct cash payments to the poor.

Some of banks have already begun testing the planned approach in certain regions although it was not immediately clear when a full rollout would occur, two of the sources said.

The Reserve Bank of India and the Indian Banks’ Association did not immediately respond to requests for comment.

India has reported 649 coronavirus cases and 13 deaths.

In a bid to discourage account holders from visiting branches, the banking association has advised its 255 member banks to suspend non-essential services until further notice.