In the age of digital banking, HDFC Bank plans to aggressively expand its branch network.

The country’s largest private sector lender is planning to add 1,500-2,000 branches annually over the next three years as it looks to ramp up its deposit franchise and capture the vast potential of cross-selling opportunities.

The private sector bank expects the first set of approvals for the proposed merger of HDFC with itself by September-October this year. It is also hopeful of the RBI allowing a shareholding of above 50 per cent in the two insurance arms — HDFC Life Insurance Company and HDFC Ergo General Insurance Company.

This was indicated by the top management of HDFC Bank at its annual analyst meet on Tuesday.

Replying to a query, Sashidhar Jagdishan, CEO and managing director, HDFC Bank, said the bank has a network of over 6,300 branches, apart from alternative channels such as business correspondents. Further, the bank has adequate capital base along with a strong asset quality.

However, the bank feels that the branch is a very important fulcrum to garner deposits and expand its business.

“We will be adding 1,500-2,000 branches over the next three years. It’s going to be a tall order, but we will be virtually doubling our distribution,’’ he said.

The bank has seen its branches rising by 2.5 times in the last decade. The period has also seen incremental deposits jumping by 2.3 times between 2017 and 2022. Deposits per branch have also risen from Rs 109 crore in 2012 to Rs 261 crore in 2022. Jagdishan added that the significant number of branches can help tap a large opportunity and they also have high cross-sell potential.

Almost 60 per cent of its branches are less than 10-year old, implying a strong potential ahead.

Branches that are more than 10 years old have relatively stronger ability to mobilise deposits. Pointing out that demographics in India are different from other countries, the HDFC Bank CEO said there is a huge potential in semi urban and rural areas.

On the HDFC-HDFC Bank merger, he said favourable macro factors are creating huge opportunities for the housing finance industry. While mortgage penetration in India remains low (11 per cent of GDP), there are other favourable factors like discipline among developers after RERA.