Kotak Mahindra Bank is planning to increase its branch count by 80% to around 3,500 in the next five years, as the lenders looks to expand presence across the country.
The country’s fourth-largest lender plans to add approximately 1,500 branches to its current network, which currently stands at around 1,965. The lender added 168 branches in the previous financial year, and aims to open 200-250 branches annually over the next five years.
“We are not going to become a primary branch-based bank, that is not going to happen. But branches and the physical network will continue to be a very important part of our distribution network,” said chief executive officer Ashok Vaswani in an analyst call. “We will increase our branch network, we were doing close to around 150 (branches), it goes to about 200, and later on, to about 250 branches, till we get to that number of between 3,000 and 3,500 in a four-five-year time frame.”
The bank will add up to 200 branches in the current fiscal, around 20% higher than fresh branch additions in 2023-24. The total branch count stood at 1,948 as on March 31 this year. Around 45% of branches are located in metros. According to the latest investors presentation, the bank has 896 branches in metro areas and 430 in urban areas. In semi-urban and rural areas, the branch count stands at 311 and 328, respectively. Urban areas will continue to remain the focus of the bank.
“We believe that by blanketing top 68 cities with the current kind of branch infrastructure and by making the branch a Kotak kind of asset which is accessed or leveraged by the SME (small and medium enterprises), commercial as well as consumer businesses, we will be able to get the maximum impact for our branches,” Vaswani said.
He does not expect the cost-to-income ratio to go up significantly due to this expansion as branches will generate revenue. “I do not think we will see any kind of a significant pick-up in cost-to-income. In fact, when we are transforming for scale and bringing technology to play, we hope to make a dent, over the next four-five years, in our cost-to-income ratio.”
The branch expansion plan comes after the lender was barred by the Reserve Bank of India to add customer digitally. On April 24, the RBI barred Kotak Mahindra Bank from issuing fresh credit cards and onboarding of new customers through its online and mobile banking channels with immediate effect.