Is branch growth enough in India, Thailand?

Aggressive branch expansion plans in India and Thailand may not be sufficient to achieve ideal branch penetration levels, and may even be futile for smaller Thai banks pressured into following a trend.

Asian Banker Research estimates that the number of bank branches in India may grow within 1.7 to 2.5 percent in the next two years. At least 1,200 new branches will be opened to add to the current 68,000. Statements from major Thai banks indicate that at least 350 new branches will be opened by 2006, an increase of about nine percent from their current 3,864 branches.

Considering Indian banks’ branch expansion plans, the country’s inhabitants-to-branch ratio, is forecasted to be about 16,144 by 2006, an increase from about 15,000 registered in 2002. In Thailand, the increase in the number of branches by 2006 will result to an inhabitants-to-branch ratio of 16,729, a negligible improvement from 17,166 in 2002.

In both cases, average population growth is expected to offset aggressive branch expansion plans. Noting the population trends and the lack of bank branches in some areas in India and Thailand, banks in these countries are advised to think that they may have to open more branches to meet ideal branch penetration levels.

Read the full article at ASIAN BANKER.