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Private Banks in India Lead Branch Expansion Drive Over Public Sector Counterparts

May 16, 2024

Private Banks in India Lead Branch Expansion Drive Over Public Sector Counterparts

Indian banks, from SBI to Bank of Maharashtra, are investing significantly in digital infrastructure to enhance customer experience. However, recent data from ETBFSI reveals that private banks are notably more aggressive in expanding their branch networks compared to public sector banks. This strategic move reflects private banks’ emphasis on local presence and customer relationships.

Private banks have accelerated branch expansion efforts to attract more deposits, underscoring the enduring importance of branch banking in fostering customer connections, especially in semi-urban and rural regions.

According to a report by S&P Global, the number of branches operated by private sector banks surged from 14,893 to 16,189 between March 31, 2021, and March 31, 2022.

HDFC Bank, India’s largest private bank, added 647 new branches in Q4 FY24, reaching a total of 8,378 branches. Similarly, Axis Bank and IndusInd Bank expanded their networks by 125 and 256 branches, respectively, during the same period.

Kotak Mahindra Bank saw a growth of 79 branches in Q4 FY24, totaling 1,948 branches. Meanwhile, Federal Bank expanded to 1,504 branches by Q4 FY24.

In contrast, public sector banks experienced slower branch expansion, with some even reducing their branch count. State Bank of India (SBI) maintained its dominance with 22,542 branches, adding 137 branches in Q4 FY24. Union Bank and Canara Bank reported marginal changes in their branch counts.

Bank of Baroda stands out among public sector banks, planning to open approximately 600 branches over the next few years, with 100 branches scheduled for the first quarter of FY25.

The disparity in branch expansion highlights private banks’ proactive approach to bolstering local presence, while public sector banks navigate a more cautious expansion strategy amidst evolving banking dynamics.

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