At a time when public sector banks (PSBs) are gaining market share, the country’s largest information technology company, Infosys Technologies is helping their cause.
Infosys, which declared its third quarter results today, disclosed that it has moved deposits out of domestic private sector banks, with a bulk of it flowing to public sector players such as State Bank of India, Punjab National Bank and Syndicate Bank.
Though Infosys did not elaborate why it has parked more money with PSBs during the first nine months of the year, bankers indicated that the prime reason was the high deposit rates.
Large private players such as ICICI Bank, which were till early last year mopping up bulk deposits, offering higher interest rates, have withdrawn from that segment as they have slowed down lending and are trying to lower the cost of funds.
In contrast, till November-end, PSBs were offering up to 400 basis points higher on bulk deposits to mop up resources for the increase in demand for loans. Demand for loans went up in the domestic market after the global credit turmoil intensified in the second half of September and private banks withdrew from the market.
It was only from December 1 that PSBs decided to cap bulk deposit rates at 9.5 per cent to lower their cost of funds and cut lending rates.
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A senior SBI executive said that post-September, there was a substantial movement of funds to PSBs. “As the uncertainty rose, a lot of people moved to SBI. Besides, the quality of service offered to corporate customers is now comparable with any private sector bank,” the executive added.
While confirming that Infosys’ deposits were in bulk, Syndicate Bank Chairman and Managing Director George Joseph said, “We had Infosys deposits before March. It is a long-term relationship. We are a strong bank, which enjoys public confidence.”
“You should not read too much into it. All I can say is we are happy that companies such as Infosys are coming to us,” said a senior Canara Bank executive.
| SAFE & SOUND Infosys’ deposits in Rs crore | ||
| Bank | Mar, ‘08 | Dec, ‘08 |
| ABN Amro | 0 | 125 |
| Axis Bank | 250 | 0 |
| Bank of Baroda | 500 | 520 |
| Bank of India | 500 | 0 |
| BoM | 387 | 503 |
| Barclays Bank | 300 | 144 |
| Canara Bank | 115 | 553 |
| Corporation Bank | 440 | 437 |
| DBS Bank | 0 | 44 |
| HDFC Bank | 450 | 285 |
| HSBC | 250 | 513 |
| ICICI Bank | 1,025 | 39 |
| IDBI Bank | 500 | 504 |
| ING Vysya Bank | 20 | 50 |
| PNB | 25 | 554 |
| StanChart | 0 | 265 |
| SBI | 1,001 | 2,012 |
| State Bank of Mysore | 0 | 500 |
| Syndicate Bank | 0 | 520 |
| Bank of Nova Scotia | 150 | 150 |
| Total | 5,913 | 7,718 |
| Source: Infosys | ||
According to the latest data released by RBI, during April-September, nationalised banks increased their share in the deposits’ business to 48.6 per cent compared with 47.9 per cent at the end of September 2007.
SBI and its associates accounted for 23.2 per cent of the business at the end of September 2008, as against 22.6 per cent at the end of the first half of the previous financial year. In contrast, the share of private and foreign banks fell.
In terms of gross bank credit too, the share of nationalised banks and SBI and its associates rose in the first half of 2008-09.