BackHDFC Bank to ramp up branch network
Lender aims to double number of branches to raise more deposits
PremiumMUMBAI : HDFC Bank Ltd plans to double the number of branches in three years as it aims to collect more deposits to meet rising loan demand.
The bank is now planning to open about 4,500-6,000 branches over the next three years, Srinivasan Vaidyanathan, chief financial officer of HDFC Bank, said in an interview.
“We are ramping up our distribution. We have opened 730 branches last year with plans to step it up. We have the vision to open roughly 1,500-2,000 branches every year for the next three years. That will provide a massive amount of lift," Vaidyanathan said.
The bank, Vaidyanathan said, is relying on a strategy that marries physical and digital presence. Under this, a bulk of branches that HDFC Bank will add will all be digital banking units, similar to what the Reserve Bank of India (RBI) has outlined in a recent circular.
In April, RBI allowed banks to open outlets to further financial inclusion and offer at least basic digital banking products and services in urban as well as rural areas. In February, finance minister Nirmala Sitharaman announced in her budget speech that to ensure the benefits of digital banking reach every nook and corner of the country, 75 digital banking units (DBUs) will be set up in 75 districts. A DBU is a specialized fixed point business unit housing a certain minimum digital infrastructure to deliver digital banking products and services.
HDFC Bank added about 563 branches in the March quarter to reach a total of 6,342 branches. The bank’s total deposits rose 16.8% from a year earlier to ₹15.6 trillion as of 31 March.
“We will have smart banking lobbies, which would have kiosks where people can come and do anything unassisted or with few people to assist," Vaidyanathan said.
Although banks in India have been expanding their digital presence and relying significantly on such avenues to onboard more customers, they believe that physical branches cannot be done away with, at least not yet. A section of consumers prefer visiting branches for transactions and are more comfortable in such setups.
As consulting firm Capgemini put it in a 2019 report, human interaction enables banks to build trust and credibility and provide related advisory services. Moreover, some customer segments still depend on traditional banking methods and are only comfortable with face-to-face interactions; and with customers split into different segments, banks require more than one delivery method or a hybrid approach to satisfy the needs of all.
“We can continue to be digital, but we will need these kinds of outlets because the customer in India wants to have a physical option close to their location," said Vaidyanathan, adding that this also helps the bank as it can use the network as a sales and service outlet while enhancing the brand. “You will see us owning the catchments, and that is where the business opportunities are, so we are happy to invest in infrastructure," he added.
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