PSBs? capital mkts exposure expands against a decline in pvt banks

Public sector banks? capital market exposures showed an increase against a decline in private banks during 2008-09. A study of growth in advances to capital market of 24 PSBs and 10 private sector banks during 2008-09 and 2007-08 proves this point. Between 2008-09 and 2007-08, advances to capital market, in the case of PSBs, rose by 8.8% to Rs 30,507 crore from Rs 28,047 crore.

Harish Menon, executive director, H-Zone Capital said: ?These figures need not necessarily mean that the appetite of PSBs from capital market investment is high. It could be a function of high deposit mobilisation that they have been able to garner.?

The highest increase in the advances to capital market was in the case of Indian Overseas Bank, where it increased from Rs 961 crore to Rs 1,771 crore.This can be explained from bank?s performance.

The total advances of Indian Overseas Bank increased by 24% to Rs 74,885 crore during 2008-09 from the level of Rs 60,402 crore during 2007-08. And the ratio of advances to capital market to total advances increased from 1.59% to 2.36%.

In Bank Of India?s case, the advances to capital market increased from Rs 1,913 crore to Rs 2,965 crore. Bank Of Baroda had advances to capital market of Rs 1,119 crore during 2007-08 which rose to Rs 1,342 crore during 2008-09. SBI, the largest PSB, also showed a growth of 5.9% in its advances to capital market during 2008-09.

On the other hand, private sector banks showed a decline in their capital market exposure during 2008-09. Among the 10 private sector banks, three banks namely Axis Bank, South Ind. Bnak and Karur Vysya Bank showed more than 25% increase in their advances to capital market during the year 2008-09.

Between 2008-09 and 2007-08, capital market exposure of 10 private sector banks decreased by 12.4% to Rs 14,237 crore from Rs 16,245 crore.One interesting thing is that only 50% of the private sector banks advances to capital market increased during 2008-09.

More than 20% saw decline in advances to capital market and the banks in this catergory include Dhanalakshmi Bank ,ICICI Bank and Karnataka Bank. The lowest increase in advances to capital market was witnessed in the case of City Union Bank .The advances to capital market of City Union Bank increased from Rs 46.71 crore in 2007-08 to Rs 47.22 crore in 2008-09.

In 2008-09, the highest advances to capital market was observed in the case of ICICI Bank (Rs 6,183 crore), HDFC Bank (Rs 4,320 crore) and Axis Bank (Rs 2,331 crore).

The total advances of ICICI Bank decreased by 27.1% to Rs 6,183 crore during 2008-09 from Rs 8,483 crore in 2007-08. And the ratio of advances to capital market to total advances for the bank decreased from 3.76% to 2.83% during the study period.