Axis Bank has opened 250 branches in unbanked areas in FY 2014 as per the regulatory requirement, which qualifies it to launch 750 more urban branches over the next two fiscals.
India’s third largest private lender feels it is a misnomer to say that venturing deep into the unbanked areas is a pain point, and asserted that this business will be profitable in a few years.
“The RBI said you could front-load your 25 per cent branches in unbanked areas and carry forward the benefit over the next three years. We have already done so...This year, we would have done about 300 unbanked branches,” Axis Bank Retail Banking President Rajiv Anand told PTI.
This gives the city-based bank the opportunity to have over 750 branches in the better-performing areas in tier-I, II and III centres.
As part of its financial inclusion drive, RBI had in May 2013 allowed banks to front-load their 25 per cent mandatory new branches in unbanked areas and carry forward to open the remaining 75 per cent new branches in urban areas over the next three years.
Axis Bank has around 2,300 branches, 52 per cent of them in the semi-urban, rural and unbanked areas.
Asked about the financial implications of more rural branches, Anand said that this will not hurt key ratios as the branches are small and operate at lower costs.
“This year, we would have done about 300 unbanked branches. They are relatively low-cost.”
The bank feels there is a big opportunity in rural areas and it is looking at it beyond garnering deposits.