The chart shows the steady erosion in the share of lending by public sector banks. It hasn’t been a one-way street, though.
Ten years ago, in 2006-07, the share of nationalized banks in total credit was 47.56%.
State Bank of India (SBI) and its associates had a 23% share and private banks had 20%.
By 2010-11, the share of nationalized banks in total credit had jumped to 52.99%; that of SBI and associates was 21.89% and private banks had 28.46%.
But that bout of lending by the nationalized banks seems to have been mostly imprudent.
The upshot has been mounting bad loans and the inability to lend further as their capital got eroded. That has led to a decline in the share of lending by public sector banks, while the private sector has stepped in.
It’s very likely that the loss in market share for nationalized banks will continue as the government dithers on recapitalizing them.