Corporates dropping PSBs as their primary bank: Report

Apart from State Bank of India (SBI) and its associates, the rest of the public sector banks (PSBs) along with foreign banks, are losing out on their share of primary bank relationships for corporates, a report has said.

"Foreign and nationalised banks have lost share of primary banking relationships to new private banks," a joint report by industry body FICCI (Federation of Indian Chambers of Commerce and Industry), IBA (Indian Banks' Association) and BCG (Boston Consulting Group), said.

The report tilted "Digital and Beyond: New Horizons in Indian Banking" was released here on Wednesday at the FICCI-IBA Conference -- FIBAC 2016 -- by Reserve Bank of India Governor Raghuram Rajan.

According to the survey, the share of primary banking relationships for PSBs, excluding SBI and its associates, fell from 35 per cent in 2013 to 30 per cent in 2016 while that of foreign banks fell from 13 per cent to 6 per cent.

At the same time, the share of private banks during the period has risen from 29 per cent to 36 per cent.

This comes amid the fact that corporates are increasingly consolidating towards two bank accounts, the survey said.

"The reason for an increase in the share of private banks is that they have better transaction banking propositions which determine primary banking relationships. They are more aggressive in marketing current accounts, payments and collection solutions than PSU banks," Bharat Poddar, Partner and Director BCG, told IANS.

The share of SBI and its associates however has not been affected and in fact has risen from 25 per cent to 28 per cent in last three years as they have constantly come up with new digital solutions for the corporates, Poddar told over the phone.

But in setting the pace for financial inclusion, PSBs have outperformed the new private banks with almost twice the number of business correspondent outlets per bank, it said.

"The proportion of zero balance Pradhan Mantri Jan Dhan Yojana accounts has significantly reduced with the impact of direct benefits transfer coming through," it added.

The survey also reveals that digital transactions have increased by 70 per cent over the last year while bank branches have decreased.

It predicts a three-fold increase in corporate banking activities on mobile devices over the next five years.

However, despite the much talked about digital wave, the new private banks have increased their branch presence by 20 per cent over the last year, it said.

--IANS

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