The State Bank of India has opened its 10,000th branch in the finance minister’s constituency. Few banks worldwide can boast of this sort of reach. Most of them are Chinese.
Indian banks went on a branch-opening spree in the decade after Indira Gandhi nationalized major banks in 1969. This has helped bring millions into the formal economy and boost savings rates. Yet, recent studies show that nearly one out of every two Indians does not have a bank account.
India now needs to look beyond this strategy to promote financial inclusion. While brick and mortar branches have not become irrelevant, new technologies make it possible to reach out to the poorest and offer them deposit and loan products. Many banks are already experimenting with biometric cards, alliances with local civic groups and merchants, and banking through mobile phones.
That’s the way forward. Alas, a technology-rich strategy does not lend itself to ribbon cutting and photo opportunities.