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Banks on a branch opening spree

Banks in India have opened more than 7,300 branches during calendar year 2013, the highest in the last decade. Canara Bank has set up 723 branches and State Bank of India 627, while ICICI Bank opened 587. One noteworthy feature is that most of these new branches were opened in non-metrocities. Banks maintian that the government’s financial inclusion program which targets to cover more than 625,000 villages is one of the motivating factors for the banks to look at semi-urban and rural areas for their expansion. It is estimated that some 300,000 villages are still not covered by any sort of banking services so far. Another factor that spurred the banks to be on an expansion mode is that government’s decision to relax the branch licensing rules. The Reserve Bank of India had decided to relax the branch authorization policy for Indian banks by allowing the banks to freely open branches in tier-1 to tier-6 centres without prior permission from the central bank, subject to certain conditions.

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