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More than 1/3rd of the new Bank branches opened in the last 3 years were in Rural areas

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Between 2013-14 and 2016-17 (up to June), more than 24000 new bank branches of SCBs were opened in the country. More than 40% of these new branches were opened in 2013-14 and more than 1/3rd of these branches were opened in rural areas.  

Ever since the government took the decision on November 8th to withdraw the old Rs 500 and Rs 1000 notes, the focus has been on the last mile implementation. The number of bank branches in various regions of the country became the focus of discussion. As per the data shared by the government in the Lok Sabha, more than 24000 new bank branches of Scheduled Commercial Banks (SCBs) were opened between 2013-14 and 2016-17 (till June). More than 8500 or 1/3rd of them were opened in Rural areas.

Norms for opening new Bank Branch

To promote financial inclusion, Reserve Bank of India (RBI) grants general permission to domestic Scheduled Commercial Banks  to open branches at any place in the country, without seeking prior approval of RBI in each case. This permission is subject to at least 25 percent of the total number of branches opened during a financial year should be in unbanked rural centers (population up to 9999). RBI has also specified that the total number of branches opened in Tier 1 centers (population 100000 and above) during the financial year cannot exceed the total number of branches opened in Tier 2 to Tier 6 centers (population up to 99999) and all centers in the North Eastern States and Sikkim.

The RBI in December last year has also issued a roadmap for opening brick & mortar bank branches in villages with a population of more than 5000. RBI observed that coverage of banking services in unbanked villages is skewed towards the Banking Correspondent (BC) model and the ratio of branches to BC is very low.  A total of 6593 villages have been identified and allotted among scheduled commercial banks (including Regional Rural Banks) for opening of branches.

More than 35% of the new branches in Rural areas

A total of 24374 new bank branches were opened by public and private sector banks between 2013-14 and 2016-17 (up to June). More than 35% (8588) of these branches were opened in Rural areas followed by 7035 in Semi-Urban and 4222 in Urban areas. The definition of rural/urban is as defined by the RBI guidelines for identifying census centers. As of 30th June, 2016 there are a total of 84389 bank branches in rural areas out of the total 133668 bank branches of Scheduled Commercial Banks (SCBs) in the country.

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Most new branches opened in 2013-14

During this period, most number of branches were opened in 2013-14 (about 42%). The number of branches opened has come down continuously from 10269 in 2013-14 to 5992 in 2015-16. More than a quarter of the new branches in 2013-14 were opened in the Southern region comprising the states of Andhra Pradesh, Tamil Nadu, Karnataka, Kerala, Telangana, Puducherry and the UT of Lakshadweep. Only about 3% of the new branches opened in 2013-14 were in the North East.

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South India leads the list of new bank branches

Of all the bank branches opened between 2013-14 and 2016-17 (up to June), 6643 (more than 27%) were opened in the South. More than 4000 new bank branches were opened in both the Central & Northern region apart from the South. As per the government classification, central region comprises both Uttarakhand and Uttar Pradesh apart from Madhya Pradesh and Chhattisgarh. Most number of new bank branches were opened in the South in each of the given years. The least number of bank branches were opened in the North East in each of the given years.

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Featured Image: New bank branches

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