An increasing number of large and middle market corporates are turning to large private banks for their borrowing needs, a report from Coalition Greenwich showed on Tuesday. Coalition Greenwich is a division of CRISIL.
From 2021 to 2022, the share of Indian corporates working with one of the largest private sector banks for overall corporate banking services increased to 38% from 33% earlier.
Over the same period, the share of corporates working with at least one large foreign bank climbed to 21% from 18% earlier, the report showed. At the same time, the share of Indian corporates working with at least one of the country’s other, smaller, private sector banks fell to 18% from 21%.
“That increase in penetration reversed what had been a three-year decline in market penetration among foreign providers, and reflects a growing aggressiveness to provide credit to middle market corporates,” the report said.
Specifically, HDFC Bank and ICICI Bank are among Greenwich’s ‘Leaders for large corporates’.
Industry revenue pools across banking grew 16% year-on-year (y-o-y) in 2021-22 (April-March) aided by a growth in cash management, domestic and cross-border trade. The capital expenditure cycle has also been key for growth in lending for banks in India.
In the domestic cash management business, large private sector banks increased their market penetration to 46% of Indian corporates in 2023 from 40% in 2022, while foreign banks expanded to 21% of corporates from 18% earlier.
Various corporates are taking steps to minimise the impact of rising interest rates, considering that the rates have been relatively higher in India than major economies.
Here, the corporates are utilising various mechanisms like utilising financial products to hedge against interest rate hikes, passing costs on to customers, and early repayment of principal.