PSU banks lose business to private sector peers

PSU banks lose business to private sector peers
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First Published: Sun, Sep 14 2008. 02 45 PM IST
Updated: Sun, Sep 14 2008. 02 45 PM IST
PTI
New Delhi: Private sector domestic banks have wrested market share from their public sector peers in the country, while foreign banks have managed to hold their turf between 1994-95 and 2006-07, an Unctad report has said.
Though public sector banks still hold the major chunk of the market, the private sector banks are increasing their share.
The private banks ramped up their share to 23.4% in 2006-07 from 8.9% in 1994-95.
The share of PSU banks fell to 69.2% in 2006-07 from 83.8% during the period, said Trade and Development Report, 2008 of the United Nations Conference on Trade and Development (UNCTAD).
Market share of foreign banks, however, remained almost stagnant during the period. Their holding marginally changed from 7.3% to 7.4% for the period under review.
In a bid to bring in greater efficiency RBI allowed entry of new private sector banks. In January 1993 norms for entry of new private players were announced by the Reserve Bank of India.
Following the financial sector reforms, entry of private players in the banking sector gave rise to competition. Players like ICICI Bank and HDFC Bank with the help of technology expanded their business rapidly.
Gradually, these players captured business from the public sector banks.
Some of the big corporate houses moved their accounts to these private banks leading to a sizeable reduction in the business of state-owned banks.
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First Published: Sun, Sep 14 2008. 02 45 PM IST
More Topics: Unctad | Banks | Business | PSU | Private Sector Banks |