Nationalized banks loan market share up – RBI
Public sector banks have profited most from the market share of deposits and loans since the global financial crisis broke out in 2008.
According to data released by the Reserve Bank of India (RBI):
- At the end of December 2010, the 19 nationalized banks as a group accounted for 52.2% of total deposits-an increase of almost four percentage points from 48.3% in December 2008.
- Similarly, in the case of bank credit, the share of nationalized banks rose from 49% to 51.6%.
- The State Bank group has seen its market share in bank deposits drop from 24.4% in December 2008 to 22.1% in December 2010. During the same period, the group has seen its share of bank credit fall to 22.7% from 23.4%.
- Private Banks have still managed to gain some market share post crisis. In December 2008, new and old generation private banks together accounted for 18.6% of bank deposits and 18.7% of bank credit. In December 2009, this had fallen to 17.1% and 17.8%.
- A year later in 2010, this had improved marginally to 17.9% and 18.2% respectively. In the private sector, growth returned after ICICI Bank stopped shrinking its balance sheet and started to grow business as well as its branch network.
Foreign banks, which were the worst hit by the crisis, saw their market share continue to fall. Their total share of bank deposits slipped to 4.8% on December 2010 from 5.7% in December 2008 while share of credit fell to 5.1% from 6.6% in 2008. Many foreign banks saw a drop in deposits after 2008 because of a flight to safety. The share of foreign banks has also declined because of the decision by a couple of banks to get out of the retail business.
After the global financial crisis foreign banks are still lagging behind nationalized banks. In case of SBI, the drop in market share is actually a result of course correction. In the months following the global financial crisis, SBI drew deposits from the rest of the industry by offering attractive rates of interest through its special deposit scheme. At the same time, it increased its share of credit by offering cheap home and other consumption loans, which put further pressure on its margins, forcing the bank to end the special schemes last year.
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