Indian PSU banks, weighed down with huge non-performing assets
(NPAs), are losing their lead banking relationships with Indian
corporate to their private counterparts, said a study
conducted by Greenwich Associates, a banking consultant group.
As of 2016, 20 per cent of large Indian
corporate participating in the Greenwich Associates annual
Corporate Banking Study said they used at least one public sector
bank as a lead corporate bank. By 2018, that share had fallen
to just 15 per cent. Bulk of those relationships went to private banks.
According to the study, private sector lender HDFC Bank and PSU lender State
Bank of India top the list of local banks which
are used by three-quarter of large Indian companies for corporate banking
services. ICICI Bank is the third most preferred bank for the Indian
corporate.
These three large lenders also
secure the top spots among middle market banking companies, with HDFC in first
place and ICICI and SBI statistically tied at the second spot.
In foreign banks, Standard Chartered Bank and Citi bank are tied
statistically with a market penetration of 51–54 per cent among large Indian
corporate, followed by HSBC at 50 per cent. In the middle market space, among
foreign banks, HSBC ranks first and Standard Chartered in second and Citi bank a
close third.
As per the Greenwich study points out that even when PSU banks retain
their status as a company’s lead credit provider, they are being cited less
often as leading providers in non-credit products such as foreign exchange and
cash management—roles that are being filled most often by private sector banks.
State Bank of India, which
has moved faster and made more progress than other Public Sector banks to
address the NPA issue, actually increased its share of lead corporate banking
relationships to 6 per cent of large companies in 2018 from 4 per cent in 2016,
the study added.
The study also estimates that 92 per cent of Indian companies will
make a change in their corporate banking roster in 2019.
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