The State Bank of India Group, which had worked with aggression for some time to grow market share for deposits and loans, saw fellow public sector banks eating into market share by the end of March 2011.
According to Reserve Bank of India quarterly data, the SBI group’s share in deposits declined to 21.6 per cent in March 2011 from 22.5 per cent at the end of 2010. Government-owned banks improved their share in deposits from 51.9 per cent to 53 per cent.
Activity in the credit market showed a similar pattern. The market share in gross credit also slipped to 22.1 per cent from 23.1 per cent a year before. Public sector banks raised their share to 52.8 per cent from 52 per cent at the end of March 2010.
The shift to a base rate regime in July 2010 impacted the short-term loan business. Under the new regime, banks were barred from lending below the base rate, unlike before when banks could offer short loans linked to the Mumbai Interbank Offered Rate (Mibor), often below the benchmark prime lending rate (BPLR). With excess liquidity in the system, the interest on short-term loan rates often ruled below BPLR, an SBI official added.
The share of foreign banks in aggregate deposits was 4.6 per cent (five per cent at end-March 2010). For regional banks, it was three per cent (3.1 per cent). As for credit, foreign banks maintained their share at 4.9 per cent. The share of regional rural banks in credit declined slightly to 2.4 per cent from 2.5 per cent, RBI said.