PSUs lose out to private banks

Private banks have overtaken public sector banks in market share in the metros with a population of more than 10 million. Metro centres have emerged as the dominant areas for deposits accounting for nearly 56 per cent of aggregate deposits in the current fiscal as against 43.1 per cent in the fiscal year 1999, according to a banking sector update by Mr Hemindra Hazari of Karvy Stock Broking Limited.
In the metro segment, he says, the market share of private banks in deposits has increased to 26.7 per cent in fiscal 2005 as compared with 12.6 per cent in fiscal 1999.This significant increase has come at the cost of nationalised banks whose market share has dipped to 46.4 per cent in the current fiscal from 54.4 per cent in FY1999. Interestingly, in this period the private banks’ market share in metro regions surpassed even that of the SBI group.
The RBI quarterly statistics for the current financial year reveal that the private banks’ deposit market share has increased to 20.6 per cent from 10.7 per cent in FY1999. These gains also came at the cost of all the other categories of banks with nationalised banks losing the maximum market share — from 54.8 per cent in FY1999 to 48.4 per cent in FY 2007, while the SBI group market share has declined to 22.3 per cent from 24.5 per cent over the same period. However, Mr Hazari says that the “success of the private banks may not continue at the same pace as government banks are better prepared and the RBI is compelling private banks to open branches in unbanked areas of semi-urban and rural India.”