Marginal decline in PSU banks' market share

Public sector banks (PSBs) have lost market share only marginally despite the onslaught of competition from private and foreign banks.

PSBs' share in the total assets of commercial banks dropped by 1.17 percentage points to 74.50 per cent in 2003-04 from 75.67 per cent in 2002-03.

Their share in total assets in 2001-02 was 75.75 per cent, pointed out a latest study of Indian banks by bankers' body Indian Banks' Association (IBA).

The total assets of commercial banks as on March 31, 2004, stood at Rs 19,75,019 crore.

The fall in PSBs' market share was largely a gain for private sector banks, with their share rising by 1.11 percentage points to 18.59 per cent in 2003-04 from 17.48 per cent in 2002-03.

PSBs' share had, in fact, dropped slightly in 2002-03 from 17.54 per cent in 2001-02. Foreign banks' share in total banking assets has nearly stagnated. Their share in 2003-04 was 6.90 per cent, compared with 6.84 per cent in 2002-03 and 6.69 per cent in 2001-02.

The dominance of PSBs continues with nine of the top 10 banks in terms of size being government-owned ones. However, they are small by global standards.

In an economy that is the 10th largest in the world, there is only one Indian bank, State Bank of India, that features amongst the top 100 global banks in terms of assets.

The aggressiveness of PSBs on the retail side has hit hard foreign banks the most than PSBs.

A case in point is the decision of the Hongkong and Shanghai Banking Corporation's (HSBC) decision a year back to exit the highly competitive automobile loans market. Standard Chartered Bank followed HSBC recently.

On the deposits front, PSBs' share is a little higher at 77.89 per cent. The total deposits of commercial banks as on March 31, 2004, was Rs 15,75,143 crore. Foreign banks had just a 5.06 per cent share in the total deposits, while PSBs accounted for 17.05 per cent of the deposits.

PSBs accounted for 73.22 per cent (Rs 6,32,740 crore) of the commercial banks' aggregate loans and advances.

PSBs' share in loans and advances was 19.78 per cent (Rs 1,70,900 crore) and that of foreign banks was 7 per cent (Rs 60,507 crore).