SBI to Open 1500 Branches Next Year
The Business Standard Reported at the end of October that India’s largest bank, State Bank of India plans to open more than 1500 in the next calendar year. The bank recently reported a 40.4 percent increase in net profit, and the branch expansion plans were revealed during the press conference by bank Chairman OP Bhatt.
The number of new branches SBI plans to opens is simply staggering, in order to meet that target SBI would have add about 125 new branches every month for an entire year. The additions eclipse HDFC’s 2008 increase, which is some 250 new branches, for a run rate of about 20 new branches a month making it according to them, the largest branch network in the country for now.
Banks are required to obtain permission from the Reserve Bank of India (RBI) the Indian banking regulator when establishing new branches. The fact that Indian banks are able to obtain permission to establish so many branches in a single year is ample evidence that the Indian banking industry does not operate on a completely level playing field. Foreign banks are allowed to establish at most 12 branches a year, which is a puny amount in comparison to their domestic counterparts, and more often than not, they do not receive permission to open even that many.
Some people argue that the financial crisis is a valid excuse for financial reforms to slow down or cease altogether. After everything that has happened, there is some justification in thinking that way. The financial crisis however, is no reason not to reform the domestic banking system; perhaps we should watch and wait for full Rupee convertibility or before allowing Indian banks to make overseas forays. Increased competition at home, even from foreign banks will only make Indian banks stronger not weaker. Directed lending to priority sectors, and excessive government borrowing needs to be rethought or scaled back at the very least, if we cannot eliminate it altogether.
Indian governments and politicians present and future need to start taking proper responsibility for improving the country and should stop hiding behind the electorate and citing them as the reason for lack of political will or resolve when it comes to repealing policy that does more harm than good. Democracy is meaningless if leaders do not have the strength to do what is right for the country rather than what is politically expedient for themselves.
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