HDFC Bank plans to add between 700 and 1,000 branches a year to improve its deposit franchise even as it awaits regulatory approval for the merger of its parent, HDFC Ltd, with itself.

With productivity levels at Rs 250 crore per branch, the country’s largest private sector lender wants to ramp up its branch network.

“It is not about preparing for the merger. We do want to ramp up branches bring in new liability relationships. Excess liability does not necessarily translate into an inability to grow. If you get deposits and put it on security of the current yield curve, you still have an opportunity to make 2% ROA,” HDFC Bank chief financial officer Srinivasan Vaidyanathan said.

The increase in number of branches will help the bank to reduce the geographical area it services. HDFC Bank wants to push its branches to serve a geographical area of 2 km from its current 4-km range. The bank added 734 branches and 2,043 ATMs during the last financial year, with 563 branches coming in the fourth quarter.

HDFC Bank has a total of 6,342 branches and 18,130 ATMs, as of 31 March 2022. The bank added two new branches a day during FY22. About 50% of the bank’s branches are in semi-urban and rural areas.

“Deposit mobilisation is a major thrust through rapid ramp up in our branch network. Currently, our branches service a radius of 4 km. We want to reduce it to within a 2-km radius. So, we will be adding 700 to 1,000 branches a year,” said Vaidyanathan.

HDFC Bank is set to tap all the opportunities in the market, both in the retail and in the wholesale loans. Besides the branch network, the bank wants to improve all the customer touch points like the ATMs and the cash deposit and withdrawal machines.

Preparing for post-Covid growth, HDFC Bank added 21,486 employees during the fiscal. This took the bank’s overall staff strength to 1.41 lakh, with 7,167 being added in the fourth quarter alone. In fiscal 2021 and 2020, the bank had hired 3,122 and 18,910 employees, respectively.

During the fiscal fourth quarter ended March, the bank grew its loan book by Rs 1.08 lakh crore. “Each branch had a productivity level of Rs 250 crore. The new vintage branch model is also progressing to that level of productivity,” Vaidynathan told analysts.

Deposit mobilisation will be one of the driving intentions of the sales force sitting in those branches, Vaidyanathan added.

The bank’s deposits were at Rs 1,559,217 crore at the end of March 2022, an increase of 16.8% over the earlier year. CASA (current account savings account) deposits grew 22%, with savings account deposits at Rs 511,739 crore and current account deposits at Rs 239,311 crore. Time deposits were at Rs 808,168 crore, an increase of 12.3% over the corresponding quarter of the previous year. CASA deposits comprised 48.2% of total deposits as of March 31, 2022.