IDFC Bank’s Managing Director Rajiv Lall said that the Bank will focus more on rural customers under its Bharat Banking brand and it plans to open 400-500 branches in the next 4 years.
According to Lall, out of 500, 375 branches will come up in rural India. The IDFC Bank got its banking license from the Reserve Bank of India very recently and it will commence its operations from October 1 this year with 23 branches.
“Of the 23 branches, as many as 15 will be located in rural Madhya Pradesh focused only on the "base of the pyramid," Lall told RM on the sidelines of a financial inclusion summit in New Delhi on Thursday. Lall was executive Chairman of IDFC and has been given the responsibility of Managing Director of IDFC Bank.
"We are convinced with the combination of technology and changes in regulations that this business (banking) will give us the moral purpose of delivering on financial inclusion and would also be adequately profitable", he said.
The executive Chairman said that rural banking will be the initial focus of the Bank. He said that there are some branches that we have already launched in Madhya Pradesh. These are part of our Bharat banking division. They have been launched as a non-banking finance corporation (NBFC) but all of that will be transferred to the bank. The idea was to test the technology and systems ahead of time.
About Bharat Banking, he said that the overall concept is to take banking to the community. That is also what Bandhan is doing. But the difference between us and Bandhan will be in the technology architecture. Compared to the traditional microfinance model, the level of sophistication of technology will be several standard deviations above what microfinance firms have been able to do with technology.
“In long term, a bulk of our customers will come from the Bharat banking division even though a bulk of the revenues and profits will come from the corporate and wholesale bank.
The focus on rural customers is obvious with the fact that at the start,15 of IDBI Bank branches will be Bharat banking and only five will be in the usual metros. “The distribution of branches in these areas will be much more than what a mere compliance mindset would require,” Lall emphasised.
On the issue of Aadhar seeding, Lall said, "Supreme Court's interim order on privacy issue related to Aadhar is potentially trublesome...there should be no objection to allowing banks or other financial institution for using Aadhar card for the purpose of authorisation."