BANKS ON A BRANCH OPENING SPREE

Saket SumanWIM2009PGDMF036

The Issue For the last few years, a lot of branches of

different banks are opening up Between June 2007 and June 2008, 3,829

branches were set up The approximate rate is 10 branches a day RBI has been exhorting banks to set up

branches in rural areas and in North East region as they have relatively less number of branches

India vs Rest of the World India 15,000:1 USA 2,720:1 Germany 1,945:1 Japan 3,968:1 Hong Kong 4,545:1 France 1,587:1 Canada 6,410:1 Sweden 4,672:1

Bank GroupNumber of Bank Branches

Rural Semi-Urban Urban Metropolitan Total

Nationalised Banks

13,198 8,140 8,440 7,997 37,775

State Bank Group

5,328 4,545 2,820 2,421 15,105

Old Pvt Sector Banks

808 1,498 1,270 874 4,450

New Pvt Sector Banks

223 870 1,147 1,285 3,525

Foreign Banks

0 2 48 224 274

Total 19,557 15,055 13,725 12,801 61,129

Reaching the corners

Natio

nalis

ed B

anks

Stat

e Ba

nk G

roup

Old P

rivat

e Se

ctor

Ban

ks

New P

rivat

e Se

ctor

Ban

ks

Fore

ign

Bank

sTo

tal

010,00020,00030,00040,00050,00060,00070,000

RuralSemi-urbanUrbanMetropolitanTotal

Region wise Distribution

27.8

17.1

17.2

19.9

15.4

2.7

Jun-07

South NorthEast CentralWest Northeast

27.9

17.1

16.9

20

15.5

2.7

Jun-08

South NorthEast CentralWest Northeast

Discussion All the new private sector banks &

international banks are focusing on the cities

In contrast to earlier times, nowadays automation has revolutionized the way of banking

The operating profit per branch for state-run banks is Rs 1-2 crore per year, Rs 4 crore for new private banks and Rs 30-100 crore for foreign banks

Conclusion The state-run banks must rethink their

branch business model to increase their operating profit

Installation of ATMs has grown by 28.4% to 34,789 at March end 2008, however, more ATMs should be installed to meet the level of foreign banks

Despite technological advancements, the hub-and-spokes model is best for a physical branch

THANK YOU!!!