Banks scurry to expand presence in non-urban areas

With the Reserve Bank of India expected to give banks a free hand to open branches and about a dozen non-banking finance companies (NBFCs) waiting in the wings to set up banking operations, existing banks are going the whole hog to expand their footprint. The fact that most of the new bank licence aspirants are NBFCs with a strong presence in rural and semi-urban centres is likely to drive existing banks to these centres to get the first-mover advantage.

K. V. S. Manian, President – Consumer Banking, Kotak Mahindra Bank said “We had envisaged a growth rate (in number of branches) of 25 to 35 per cent per year ... With imminent entry of new banks we have enhanced this (target) to 30 to 40 per cent per year.” The private sector banks are also rolling out rural branches faster than in the past, he added. “The new rule to free branches of licences is a transparent and friction-free process, and I think this will help banks plan their network expansion better,” said Manian.

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