Even as PSU banks saw a good run in the first half of the calendar year 2019 with a sharp increase in new deposits, private sector banks are becoming the preferred choice of depositors for parking their money, again.
Even as PSU banks saw a good run in the first half of the calendar year 2019 with a sharp increase in new deposits, private sector banks are becoming the preferred choice of depositors for parking their money, again. More depositors chose private banks such as HDFC, ICICI Bank and others in the last six months to deposit their money, The Indian Express reported citing various banks’ financial statements. The change is not sudden, as depositors have been moving towards private sector banks in the course of the last three years with the exception of a brief period when public sector banks seemed to be getting back in the game.
In India, the top eight private banks saw a surge in their deposits by Rs 2.68 lakh crore collectively. On the other hand, top-eight state-owned banks saw an increase in their deposits by Rs 2.58 lakh crore. While PSBs have a fairly dominant market share with 70% of business, private banks have tried to get greater presence by opening branches in rural areas as well.
In the first half of 2019, eight state-owned banks including SBI and Punjab National Bank (PNB) accumulated Rs 5.25 lakh crore collectively, which was more than double of what the private sector banks could say for themselves. The latest shift in preference is significant as PsBs still hold the majority of outstanding deposits. Reserve Bank of India also pointed out this shift in its latest Report on Trend and Progress of Banking in India. “The average share of PVBs (private banks) in the incremental term deposits during 2016-19 was 81% vis-a-vis 19% in 2011-15. Corresponding numbers for PSBs were 13% and 77%, respectively,” it said.
The eight private banks whose deposits have been counted are: HDFC Bank, IndusInd Bank, Axis Bank, Kotak Mahindra Bank, Federal Bank, ICICI Bank, Bandhan Bank and IDFC First Bank while the state-owned banks counted are: SBI, Punjab National Bank, Bank of Baroda, Canara Bank, Bank of India, Union Bank of India, Indian Overseas Bank and Oriental Bank of Commerce.