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Indian Private Retail Banks: Su CASA es Me CASA

In one of my recent interaction with cluster and branch heads of India's top three private national banks, a startling fact emerged that the majority emphasis is purely on selling the maximum possible retail portfolio to the customer with the underlying mandate of growing as much CASA as possible.

The instructions are to beg-borrow-steal as much CASA as possible. The targets are unrealistic and ever pilling up. This is a grim situation as it doesnt seem to help the indian banking scenario much and has diminishing returns in the overall big picture.

Indian banks carry the highest ROE on their deposit assets, aided with the higher savings apetite of indians, the numbers are well secured and banks look safe on those grounds. The need of the hour is to address more severe issues like the reach of the banks into the 650,000 villages of the nation with more than 70% population and per capita savings residing there.

The national govt banks have deep pockets into the rural india and hence the loyalties. They hardly stress on capturing the urban india CASA rather concentrate their rest of banking products to be sold in urban india with higher per capita earning and investing potential. The private national banks are sitting quite low with less than 1000 branches across india but relatively higher number of ATMs whereas govt national banks are sitting high up the ladder with approx 9k branches and sizeable ATMs positioned across urban and rural india.

Increasing or focussing only on CASA wont serve the purpose as the growth potential sits with the rural masses and rural india. The infra growth and govt spends are mostly directed in these rural zones which are the hunting grounds for bigger international banks, the rural diaspora is the hunting ground for govt national banks. If private national banks have to flourish, they'll have to focus the efforts specific to the demography, not everything applies to everyone and everywhere in India, many bigger organisations have failed here due to this approach.


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