Indian Bank follows SBI, gets permission from RBI to launch its own subsidiary

Chennai-based Indian Bank is gearing up to establish a subsidiary aimed at providing value-added services and cost optimization, particularly for operations in smaller towns and rural areas. Following the lead of State Bank of India and Bank of Baroda, Indian Bank’s proposed subsidiary has received in-principle approval from the Reserve Bank of India (RBI), as per the bank’s Request for Proposal (RFP) for the empanelment of manpower consultants.

What will this subsidiary do?

The subsidiary is expected to offer services related to Business Correspondent Activities, Business Operations, Customer Service and Grievance Handling, Call Centre operations, and Support functions for IT and Vendor Management, in accordance with RBI guidelines. With over 20,000 touchpoints, including domestic branches and Business Correspondents, Indian Bank seeks to enhance its reach and operational efficiency.

Subsidiary Approach

Public sector banks, including the country’s largest lender SBI, have embraced the subsidiary approach to bolster support for branch networks in rural and semi-urban areas. The move aims to achieve operational scalability, cost optimization, and local talent integration, contributing to financial inclusion and asset quality improvement. SBI’s subsidiary, State Bank Operations Support Services Private Limited (SBOSS), has successfully deployed Feet-On-Street (FOS) with technology support, serving over 5,000 branches in rural and semi-urban areas.

Similarly, Bank of Baroda has set up Baroda Global Shared Services, a wholly-owned subsidiary, focusing on integrating service functions to streamline operations, create synergies, and realize substantial cost savings through centralization. The automation of various processes has allowed Bank of Baroda to redirect its branch workforce toward core activities, emphasizing sales and service functions.