The Associated Chambers of Commerce and Industry (Assocham) stresses the need to increase the number of bank branches in the country. The initiative has to be taken in order to cover the population residing in rural areas and meet the standards of a developed economy.

A joint study by Assocham and research firm Ernst & Young states that, "While one branch caters to the need of 16,129 individuals in India, a similar branch in many developed countries may only address the needs of 1,587 to 4,484 individuals."

Each bank branch in UK caters to the need of 4484 people while that in US attend 2720 people. The population and branch ratio in Germany is 1945 where as it stands at 3968, 454, 1587, 6410, 4672 and 10101 for Japan, Hong Kong, France, Canada, Sweden and Singapore respectively.

Although the bank network of the commercial banks, credit co-operatives and NBFCs has been constantly increasing but it still lacks the standards of developed countries in terms of population per branch. Therefore there is an immediate need to gear up this ratio by reaching to the huge un-banked population in rural India.

The study reveals that the banking services in rural and semi-urban areas are mainly been extended by the Regional Rural Banks (RRBs) and co-operative banks but there is a need to consolidate them in order to increase their competitiveness. "In today's competitive environment, it would be essential for these RRBs to consolidate either among themselves or with their sponsored banks to improve their scale, efficiency, profitability and viability of conducting business in rural areas," said the joint study.

Hence it is felt that the regulators and Government should come out with more flexible merger and acquisition norms of entities and confirm that such firms could be converted profitably. "This is especially true for those companies where there is a sound business model in place. Such companies could be turned," the report said.

At the same time Assocham also expects the economy to record a growth of close to 7% in the current fiscal. This is anticipated despite of the negative growth in manufacturing and continued liquidity squeeze in the industry.

Assocham President, Sajjan Jindal said that the economy should unveil a third round of fiscal stimulus package to ensure credit to the stressed manufacturing sector.