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Made in Madurai                

Friday, August 05, 2011

Banks have to look at Tier II and Tier III cities also - Coimbatore, Ludhiana, Madurai, Lucknow, Kozhikode, Bhopal and Nashik

These many days Banks and other majors have only looked at the metros and other main cities in India for their customer care and all other centers. But, now they will have to look at the tier II and tier III cities as well.

Banks (especially private ones) would have to pay more attention to the high demand for money in tier II and tier III cities in India.

Crisil says that despite the difference in volumes, higher profit margins can make smaller towns as attractive as metro cities.

The report covered 15 tier II cities that included Coimbatore, Ludhiana, Madurai, Lucknow, Bhopal, Nagpur, Nasik, Rajkot among others. These make up for 15 percent of the total retail loan demand in India.

In some of these cities growth prospects are so strong that the car loan demand might grow at 20 percent for the next couple of years against an expected Indian average of 13 percent.

Gold loans are expected to grow at 50 percent rate, mainly driven by smaller towns.

Even HDFC Bank, which disbursed Rs 15,000 crore worth new retail loans in the first quarter this year, saw 50 percent of loans coming from tier II and III locations.

Yes bank, which intends to take its retail portfolio to 10 percent by the year end from the current 1 percent, will also open most branches in tier I and Tier II cities.

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