Indian Bank has been in Sri Lanka's capital Colombo since 1932 and has mainly been focusing on corporate lending and syndicated loans.
The new branches will also help diversity the loan book.
The bank has received Sri Lankan and Indian regulatory approval to set up a branch in Jaffna, which will be up and running by January 2011.
By the end of the year it is hoping to set up a branch in the northeastern city of Trincomalee and also in Batticaloa, he said.
But in Jaffna it is looking at self-help group based lending, especially to agriculture, dairy and fisheries using a model which has been successful in India.
The branch has been ploughing back profits to boost capital to prepare for higher loan growth. It already had 3.5 billion rupees in capital, which was higher than the required 3.
0 billion year end floor set by the central bank.
"We will be ploughing back profits to meet the 2015 capital requirement of about 5.
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0 billion Sri Lanka rupees," Bhaskin said.
"I think