Three New Branches in Chhattisgarh: Choosing Between Coverage and Viability

Recommend B, C and E.

Criterion 1 - marginal coverage. D fails on the first test. 61,000 people with six branches inside 3 km, two of them recent, is roughly 10,000 people per branch and no unbanked catchment at all. Approving D consumes a third of the year's authorisation for zero inclusion gain; it is the kind of proposal a board rejects on paper.

Criterion 2 - unbanked status. B has no branch within 9 km. E has none within 14 km. C's only outlet opens three days a week, which is functionally half a branch and does not count as coverage in any real sense.

Criterion 3 - the unbanked rural centre expectation. E, at 4,200 people, is the only proposal that is unbanked in the regulatory sense, since a URC is a rural centre with population below 5,000. With only three branches, dropping E makes the expectation of about a quarter of new branches in URCs very hard to defend in the annual return.

Criterion 4 - viability and social return. B is the strongest business case in the set: SHG and FPO density signals credit demand, and remittance inflows mean low-cost deposits walking in. C is commercially the weakest but has the largest unserved catchment, about 50,000 people, and the highest inclusion need in the state.

A is the close call. 52,000 people and three branches is not saturation, but coverage exists, no SHG credit culture is recorded, and the marginal inclusion gain is the smallest of the remaining four. Defer A to the next cycle and upgrade the existing business correspondent outlet there now.

Risk to flag: C and E will each need a subsidy in years one to three. A branch that loses money for three years becomes a board-level embarrassment and gets closed, and closing a branch in Bastar after eighteen months costs far more in reputation and in political attention than the loss it saves. The proposal must therefore state the loss, the funding source and the review point - not present an optimistic break-even.

Mitigations to write into the proposal:

• C - staff for the catchment, not the block headquarters. Two officers plus fixed-point business correspondents in two of the larger villages. Route MGNREGA and PMJDY DBT credits through the branch so the deposit base exists on day one rather than in year two.
• C - build a credit pipeline. Forty villages with no credit flow is a market, not a charity. Form and federate SHGs and on-lend through the existing state rural livelihood programme; that is what converts a branch from a cash-out counter into a lending unit.
• E - plan for the July–September road. Schedule cash movement and remittance replenishment around the monsoon window, and hold a higher cash buffer than a comparable branch would, or the branch will simply run dry for a week at a time.
• Both - a 36-month review with named indicators: deposit accounts opened, PMJDY accounts activated (not merely opened), SHG credit linkage, and CASA ratio. If C has not reached the agreed deposit threshold by month 24, convert it to a BC-led model rather than closing it - the presence stays, the cost falls.

That combination is what makes an inclusion-heavy set defensible: the loss is bounded, and the exit is planned before it is needed.

The information that would change the ranking: whether B's SHGs and FPOs are actually active and unbanked elsewhere. The entire case for B rests on converting SHG credit demand and remittance inflows into business. If the 31 SHGs are dormant or already linked to another bank and the FPOs bank in Raipur, B drops to roughly A's level and A moves up. That is the weakest assumption in the recommendation: it is the only quantitative claim in the file that has not been verified at ground level.

Two others worth naming. If the '38,000 across 40 villages' in C is not backed by village-level population figures, C's catchment advantage collapses to 12,000 and it becomes a pure inclusion decision. And if the board's unbanked-rural-centre expectation is a firm condition rather than a guideline, E is mandatory and the contest is between B and A for the two remaining slots.

Twelve-month indicators, in order of usefulness:

1. Active accounts as a share of accounts opened - a branch that opens 4,000 accounts of which 300 are used has not achieved financial inclusion.
2. SHG credit linkage value at C and B, because that is the difference between a branch and a cash-out counter.
3. CASA ratio and cost of deposits at B, testing whether the remittance theory holds.
4. Downtime days at E during the monsoon, against the buffer assumption in the proposal.

Measure these, publish them to the board, and the next year's branch decision is made on evidence instead of on the loudest representation.