Private sector lenders are fast becoming the lead bankers to large corporate groups as state-run lenders continue to struggle with issues of their own, says a report. The findings of the report Wednesday by the advisory firm Greenwich Associates come at a time when greater thrust is being given to relationships in banking.
The advisory firm said in 2018, only 15 percent of large corporate respondents in a survey used a state-run lender as its lead corporate bank, which was down from 20 percent in 2016. “Bulk of those relationships went to private sector banks,” it said.
In a 2019 study, it said even when a state-run lender is indeed the lead bank from a credit perspective, fee earning opportunities like foreign exchange and cash management are being given to private sector banks. It said State Bank of India is the outlier in this as it has moved faster and made more progress than other its peers to address the non-performing assets issue.
SBI’s share of corporate banking relationships grew to 6 percent from 4 percent level in 2016, it added. Between the largest private sector lender HDFC Bank and SBI, the two count on three-fourths of corporate India as their clients, it said.
Commenting further on the state-run lenders, it said there are issues of quality perceptions, stating the survey findings which say average quality scores for state-run banks declined further below the industry average.