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| Govt-owned banks increase market share |
| BS Reporter / Mumbai Oct 22, 2009, 00:59 IST |
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Foreign banks record 7.6% drop in credit flow, private players see 3.7% growth.
Private and foreign banks continued to lose market share in recent months despite their claims of resumption of lending.
According to the latest bank groupwise data released by the Reserve Bank of India today, public sector players increased their share of the bank credit business by 2.2 percentage points between June 2008 and June this year while the share of private and foreign banks dropped by 1.9 percentage points and 1.4 percentage points, respectively. For the quarter ended June 2009, public sector players, including SBI, accounted for 73.9 per cent of bank credit, as against 70.7 per cent a year ago.
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SHARE IN BANK CREDIT AND DEPOSITS (%)
|
|
Bank credit
|
|
Quarter-ended
|
Nationalised |
SBI group |
Private |
Foreign |
| 8-Jun |
47.6 |
23.1 |
19.9 |
7.1 |
| 9-Mar |
50.5 |
23.1 |
18.2 |
5.9 |
| 9-Jun |
50.4 |
23.5 |
18.0 |
5.7 |
| Deposits |
| 8-Jun |
48.6 |
22.6 |
20.1 |
5.8 |
| 9-Mar |
49.5 |
24.1 |
18.2 |
5.2 |
| 9-Jun |
49.7 |
24.2 |
17.5 |
5.6 |
| Source: RBI |
The story for bank deposits is the same. The public sector players accounted for 73.9 per cent of the total deposits for the quarter ended June this year, compared with 71.2 per cent a year ago. The shift, bankers said, was on account “flight to safety” as depositors felt public sector banks were safer. These banks also offered higher interest rates.
According to the RBI data, despite the central bank’s repeated advisories to step up lending, foreign banks recorded a drop of 7.6 per cent in outstanding credit during April-June 2009 as against an increase of 34.4 per cent in the corresponding period last year. Following the credit crisis, which intensified in September 2008 and forced foreign and private players to go slow due to higher delinquency levels, the growth rate dropped to 3.5 per cent during January-March 2009.
“Foreign banks were cautious in lending during the first quarter. Demand for credit was also low as companies used internal resources to fund whatever little funding they needed,” said a senior executive with a foreign bank.
In case of deposits, however, foreign banks saw a higher growth of 18.6 per cent during April-June 2009, as against 12.7 per cent in the previous quarter. During April-June 2008, deposits had grown by 19.3 per cent.
The foreign bank executive said banks had increased the flow of deposits from retail investors in recent months.
Private banks recorded 3.5 per cent growth in credit during April-June this year as against 22 per cent a year ago. During January-March 2009, the growth rate was 10.7 per cent.
Executives of private banks attributed the drop in credit growth to lack of demand in the system. “The real demand in the system was missing. The impact of revival will be felt gradually and we expect the credit growth to improve from December,” said Parthasarathi Mukherji, president, corporate banking, Axis Bank. Low credit demand resulted in a growth of 16.2 per cent in lending by SBI and its associate during the June quarter as compared to 26.1 per cent a year ago.
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