Suryavanshi IAS | UPSC Mains & Prelims Insights
🏦 "Return of the Phygital Banking Era: India's Branch Expansion Story"
🔹 Relevance for UPSC Aspirants
India's banking landscape is undergoing a significant transformation — despite the digital revolution, traditional physical branches are re-emerging. This trend is highly relevant for UPSC GS-II, GS-III, and Essay papers, as it ties directly to financial inclusion, governance delivery, digital infrastructure, and public service access.
🧭 Mapping the Physical Banking Expansion
📈 Key Figures:
HDFC Bank: Opened 3,284 branches between 2022–24; hired 40,305 employees in FY24
ICICI Bank: Opened 1,341 branches in the same period; hired 9,204 employees in FY24
But in FY25: HDFC hired only 994; ICICI cut 6,723 jobs
👉 This indicates branch expansion is ongoing, but hiring is slowing — a unique trend.
🖥️ Digital vs Physical: Are Bank Branches Still Relevant?
Digital banking in India has made services like eKYC, UPI, and online account opening accessible and seamless.
However:
From 2008 to 2023, bank branches per 1,000 sq. km increased from 25 to 50
Branches per 1 lakh adults increased from 9 to 14
This shows that despite digital progress, physical branches remain important.
🔄 Trend of Branch Closures and Reopenings
🔻 2020–22:
Rise in branch closure rate
Net new branch openings nearly flat
Public Sector Banks (PSBs) closed 9,207 branches from 2019–24, including 3,519 in 2021 alone
🔼 2022H2–2024Q4:
Net new branches: 11,963 (in just 2 years)
Private banks added 15,537 branches (2019–24); PSBs added 8,995
👥 Rise of Banking Correspondents (BCs)
Payment banks added 1.5 to 3 lakh BCs annually (2019–24)
PSBs: 15,000–33,000 per year
Private banks: Never more than 8,000
👉 This indicates PSBs and payment banks are using BCs to outsource basic services while maintaining digital service delivery.
📚 Syllabus Relevance
GS Paper II:
Financial inclusion
Service delivery reforms
Transparency and accountability in governance
GS Paper III:
Digital infrastructure
Economic development
Essay:
“Digital vs Physical: Balancing Service Delivery”
“Bank Branches as Gateways to Financial Inclusion”
GS Paper IV (Ethics):
Innovation in governance
Efficiency in public service
🔍 Previous UPSC Prelims Questions
🔸 UPSC Prelims 2020
Q. With reference to Pradhan Mantri Jan Dhan Yojana (PMJDY), consider the following statements:
It provides low-cost banking services to every household.
Overdraft facility is provided under this scheme.
Only public sector banks can open accounts under this scheme.
A. 1 and 2 only
B. 2 and 3 only
✅ C. 1 and 2 only
D. All of the above
Explanation: Private sector banks are also permitted to open Jan Dhan accounts, so Statement 3 is incorrect.
🔸 UPSC Prelims 2018
Q. In India, the ‘Banking Correspondent’ model was launched for the purpose of:
A. Providing banking services to CSR sectors
✅ B. Delivering banking services to remote and rural areas
C. Connecting foreign investors with local banks
D. Acting as substitutes for specialized banks
Explanation: BCs act as agents offering basic banking services in unbanked and underserved regions.
🛠️ Policy Suggestions
Encourage private banks to expand in rural areas
Strengthen BCs through training and supervision
Develop policy frameworks for ‘phygital’ banking models
Use bank branches as hubs for spreading financial literacy
🖋️ Conclusion
India is entering a “phygital” banking era — one that balances digital innovation with physical reach. Branches still play a critical role in deposit mobilisation, credit disbursement, and financial education. For UPSC aspirants, understanding this trend is crucial for debates around governance, inclusion, and public service delivery.
🎓 Presented by: Suryavanshi IAS
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