India's second largest private sector lender - HDFC Bank - will be focusing on having a greater number of new branches in the semi-urban and rural areas, and is targeting to take the total proportion of such outlets to 60 % in three years, according to a top official.
"In the next three to four years, the number of semi-urban and rural branches will go up till 60 % from the present 54 %," HDFC Bank Executive Director Paresh Sukthankar said.
He said around 80 % of the approximately 300 new branches which the bank will be opening this year will be in such areas.
It can be noted that due to the excessive concentration of banking in the urban areas, and the neglect of the un-banked or the under-banked areas thereof, the regulator has asked banks to open a fourth of their new branches in such areas. The stipulation applies even for the new banks.
Sukthankar said apart from meeting the regulatory requirements on the number of branches and contributing to its priority sector lending requirements, this move will also give the bank a head-start over competition, which will also be looking at entering such areas.
With a newer set of banks expected to enter business, it will also help in securing better customers, he said.
When asked about the costs associated with such a move and if this focus will hurt the operations cost, Sukthankar said that the cost of opening such branches is lower than that in the city.
Unlike other banks, which enter such areas with offering only a few products, HDFC Bank goes with its entire bouquet of products which helps it increase the income and fees from a particular branch, he said.
The rural branches will also help the bank in its sustainable livelihoods banking initiative, wherein it gives micro credit to skilled people, trains them in a discipline and also marketing the goods, he said.