Banks open more branches to cash in on credit growth

Indian banks are on a branch addition spree as they look to capitalise on the purple patch in credit growth. While digital banking is growing at a faster clip, banks feel that a physical-plus-online approach is here to stay. The trend is led by private banks. HDFC Bank alone opened 684 branches in the December quarter and aims to add more than 1,500 branches for the fiscal year.

“We are pursuing a branch build strategy and have another 600 branches in the pipeline,” said Srinivasan Vaidyanathan, chief financial officer of HDFC Bank. “The goal is to grow faster than the market to gain deposit share. We are striving to get there by expanding our distribution and getting closer to the customer.”

ICICI Bank opened about 300 branches between April and December 2022 and had a network of 5,718 branches at the end of last month.

Axis Bank has added 91 branches so far this fiscal to take its total branch strength to 4,849 at the end of December 2022. It separately onboarded 6,000 village level entrepreneurs to act as an extended arm to its rural branches. “During the quarter, we added nearly 6,000 VLEs (village level entrepreneurs) to take our overall CSC VLE network to more than 60,200…They would act as extended arms for our 2,065 Bharat branches,” said Amitabh Chaudhry, managing director of Axis Bank. “The disbursements through the CSC network have been up over 5x YoY in December quarter.” IndusInd Bank added 341 branches during April-December, taking total branches to 2,384.

At the end of September 2022, banks in India had 127,915 branches in all, out of which 84,534 branches belonged to public sector banks while 37,223 branches were added by private sector banks, as per data from the Reserve Bank of India (RBI).

After declining for two consecutive years, new bank branches opened by banks increased by 4.6% during 2021-22, led by new branches opened in tier-4, tier-5 and tier-6 centres, RBI data showed. During 2021-22, new branches opened by private banks increased by 21.2% as compared to a fall of 30.8% in the previous year. State-run banks opened fewer new branches in FY22 though share of rural areas in new branches rose to 20.8% on year.