Indian banks are going rural in a big way. Apart from covering un-banked areas where the banks are learning to provide basic services through the business correspondent (BC) model, they are planning to open 1,500 branches in 2011-12.
These plans have been firmed up after the Reserve Bank of India (RBI) asked them to open 25% of their branches in rural areas, for which they don?t require any permission from the central bank.
Speaking to FE, a senior official of State Bank of India (SBI), the country?s largest bank, said they are planning to open about 500 branches in rural areas in 2011-12. SBI has already more than 5,100 branches out of its total branch network of 13,500 in rural areas.
?We have 38% of the bank’s branches in rural areas and 90% of them are already profitable ones. Rest will take some more time,? said the official.
These branches are mostly into retail banking, agriculture and SME financing.
Others are following. KR Kamath, CMD, Punjab National Bank (PNB), said the bank is working hard to achieve financial inclusion goals and is in the process of finalising its plans for opening rural branches for the current fiscal. ?How those branches become profitable will depend on the place where we will be opening such branches,?? observed Kamath.
The Bank of Baroda (BoB) has identified 450 of its existing branches that can go for focused lending in rural areas during the current fiscal. MD Mallya, CMD, said, ?We are looking at opening 75-80 branches in rural areas during the current fiscal, which can be used for providing services like accepting deposits and lending. The break-even time for these branches is two years.?
MV Nair, CMD, Union Bank of India (UBI), too, added that the bank has plans to open over 100 branches in rural areas for meeting the financial inclusion programme.
Canara Bank is also not lagging. Archana Bhargav, executive director, Canara Bank, said the bank will open 250 new branches in the current fiscal and 100 of them will be located in rural areas, for which the bank doesn?t need any RBI licence. ?We already have 800 branches in rural areas. We want to offer affordable banking services like providing general credit cards, kisan credit cards and sell micro insurance products through those branches.?
Saying that rural branches constitute about 55% of the bank?s total branch network and contribute 30% of its total business, M Narendra, CMD, Indian Overseas Bank, added, ?We are opening 400 branches in the current fiscal and one-fourth of them will be in rural areas. The rural branches contribute 20% of the bank?s total deposits.?
IDBI Bank, too, is planning to open over 50 rural branches. RM Malla, CMD, said, ?There is always an issue of recruiting the right kind of people for those branches and imparting thorough training to them. We are basically looking at increasing retail customers when it comes to our expansion plan in rural areas.?
To achieve these goals, banks are planning to recruit exclusive officials for rural branches and develop suitable technological platforms for their operations in these areas and achieve financial inclusion.
