Two of India's public sector banks are in the process of setting up regional processing centres (RPCs) with the aim of speeding up and creating more efficient back office operations.

The State Bank of India (SBI) is expected to be the first public sector bank in India with an operational RPC while the Bank of Baroda plans to have established similar centres by the end of 2004.

Sales offices

Up until now, only private sector and foreign banks have operational RPCs in India, and the move by the two public sector banks will enable them to benefit from the perceived benefits and advantages of centralised back office functions.

SBI plans to set up its first RPC in Mumbai, enabling the bank to continue refurbishing its urban branch network to give them a consistent corporate look and feel and use these premises more as sales outlets. Some branches will focus on retail banking, others on small- and medium-sized enterprises (SMEs) and private banking.

Processing centres

The RPCs would provide all back-office operations for the branches, including trade finance services such as letters of credit (L/Cs) and bank guarantees. The centres would also undertake account opening work and the management of customer services such as the provision of cheque books, ATM cards and pin numbers.

SBI envisages that RPCs will initially serve only metropolitan and urban branches and the bank says it will start by running a pilot project for its retail deposit products in Mumbai where the RPC is expected to gradually acquire more work from the branches. Eventually, this RPC would cater for around 600 branches in Mumbai, Ahmedabad and Bhopal.

Private sector success

Bank of Baroda is reportedly planning to establish six RPCs including one centralised centre for corporate business with RPCs for retail and SME business located across the country, possibly along regional lines.

Private sector banks in India, including CICI Bank, HDFC Bank and UTI Bank have apparently won many new customers since they introduced RPCs.

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