Private banks' share in credit to reach 40% by 2020, says Icra

Banking industry reported marginal growth of 2.2% in FY17, as compared with 6.9% in FY16

Private banks have been taking the space vacated by capital-short public sector banks in the credit market. Private banks’ share in banking sector advances will reach 38-40 per cent by March 2020, from 27.5 per cent in March 2017, according to rating agency Icra.

Indian banking is going through a transition, with private and public sector banks (PSBs) facing different challenges. The latter are plagued with asset quality issues, leading to higher credit costs and losses, Icra said. 

As a result, capital-short PSBs have been constraining their lending. Their tier-I capital was 9.7 per cent of risk-weighted assets as on end-June, against