PSU banks depend more on interest income: Assocham

Public sector banks (PSBs) depend excessively on their interest income compared to their peers in the private sector as their fee-based earning from other services is declining, a study said.

The fee-based income of PSBs declined by 10 per cent, while that of the private sector banks registered a sizable growth of 29 per cent in the last financial year, according to an Assocham Eco Pulse study on 'Income Sources of Indian Banks'.

"With economy growing at an unprecedented rate of 9.4 per cent during 2006- 07, demand for fee-based services of the banks is certain to go up. Hence, initiating well-thought-out steps to enhance fee-based income may be essential for the banks", Assocham President Venugopal N Dhoot said.

The high interest regime has augmented the interest income of PSBs by 18 per cent, although it is less than the whopping 44 per cent rise recorded by the private sector players in the last financial year, the study added.

It found that some of the major PSBs registered a decline in their fee-based income in FY07. These included United Bank of India witnessing a downward trend by 26.76 per cent followed by the State Bank of India (22.41 per cent), Allahabad Bank (21.98 per cent), Punjab National Bank (18.15 per cent) and Dena Bank (10.82 per cent).