IDFC plans rural focus

Infrastructure finance company IDFC plans to have a rural focus for the bank, for which, it plans to start operations on October 1, 2015.

“The bank will begin operations with 20-25 branches and scale up the branch network to around 65 by March 2016 with 70 per cent of the branches in rural areas,” IDFC’s management indicated in a conference call after its first quarter earnings.

The management expects tough return on asset (RoA) levels of around 1 per cent for the bank initially, and expects it to grow further as it improves the liability franchise and builds a strong asset base.

As far as the bank structure and strategy is concerned, the company indicated that it plans to have three seperate divisions, namely wholesale division, rural divison and consumer bank. According to JP Morgan, while the wholesale division will capitalise on the existing strong corporate relationship with lower dependence on term lending and higher focus on working capital. The incremental growth will be driven by non-infra segment to diversify the overall loan book.

The focus of the rural division will be to penetrate deeper into the rural areas with higher focus on business correspondents (BCs). The branches will be asset light and will have higher proportion of the overall branch network.

As far as the consumer bank is concerned, the focus will be to grow in urban areas.


Branching out...

IDFC plans to have a rural focus for the bank, which may
begin operations from October 1, 2015

The bank will begin operations with 20-25 branches, scaling up the branch network to around 65 by March 2016

IDFC management expects tough RoA levels of around 1 per cent for the bank initially