Banks in India are opening new branches at a rapid pace, with over 3,829 new branches opened between June 2007 and June 2008, equivalent to around 10 new branches per day. While new private and international banks are focusing on opening branches in cities, the Reserve Bank of India has encouraged banks to open more branches in rural areas and northeastern states, where branch availability is relatively lower. Despite increasing automation and use of ATMs, the traditional physical branch model remains important for banks in India to serve both rural and urban customers.

1. BANKS ON A BRANCH OPENING SPREE SaketSuman WIM2009PGDMF036

3. The Issue For the last few years, a lot of branches of different banks are opening up Between June 2007 and June 2008, 3,829 branches were set up The approximate rate is 10 branches a day RBI has been exhorting banks to set up branches in rural areas and in North East region as they have relatively less number of branches

4. India vs Rest of the World India 15,000:1 USA 2,720:1 Germany 1,945:1 Japan 3,968:1 Hong Kong 4,545:1 France 1,587:1 Canada 6,410:1 Sweden 4,672:1

6. Reaching the corners

7. Region wise Distribution

8. Discussion All the new private sector banks & international banks are focusing on the cities In contrast to earlier times, nowadays automation has revolutionized the way of banking The operating profit per branch for state-run banks is Rs 1-2 crore per year, Rs 4 crore for new private banks and Rs 30-100 crore for foreign banks

9. Conclusion The state-run banks must rethink their branch business model to increase their operating profit Installation of ATMs has grown by 28.4% to 34,789 at March end 2008, however, more ATMs should be installed to meet the level of foreign banks Despite technological advancements, the hub-and-spokes model is best for a physical branch

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