Amid digital focus, HDFC Bank, Yes Bank and others may add 1,500 branches

KOLKATA: Even as the emphasis is shifting towards digital banking channels, high street Indian private sector lenders such as HDFC Bank and Yes Bank, among others are accelerating their branch expansion plans to consolidate their presence at the grassroots before small finance banks dot the local banking landscape and new entities plan their universal banking foray.

Four large private lenders may add about 1,500 branches between them, growing their physical presence by a tenth this fiscal, as it has been established that branches remain the key to customer acquisition, and later, their retention.

"A decade back, we had a skewed bias to remain confined to the urban parts of the country. We have now distinctly shifted focus to upcountry locations, which we call Bharat," said HDFC Bank's country head for branch banking, Ravi Narayanan.

HDFC Bank is likely to open about 450 branches this fiscal, raising its tally from 4,520 to 4,970, while Axis Bank plans to set up 350-400 branches to raise the count from 2,904. Yes Bank said it is planning to add 290 in FY17 to take its branch footprint to 1,150, making it the highest-ever expansion plan in a single fiscal.

Branch banking in big private banks has seen a paradigm shift from transaction to conversation, trying to help consumers with a better understanding of financial products.

Increasing branches also provides a platform for digital banking to grow. "Branches are not only playing a key role in acquiring new customers, but are also helping them migrate to digital," Axis Bank's executive director for retail banking Rajiv Anand said. "There is still a large chunk of the population that prefers the brickand-mortar model," he said.

In the past two years, HDFC Bank added 1,117 branches, ICICI Bank about 700 at the end of March 2016, while Axis Bank added 495 branches. Yes Bank opened 230 last fiscal. Many of the new branches would be in smaller towns, where the competition is going to be intense with 11 payments banks and 10 small finance banks kicking off from 2017.

Yes Bank

HDFC Bank