A recent report by the State Bank of India (SBI) highlights the dominant position of Public Sector Banks (PSBs) in India, which account for more than 50 percent of the banking business in terms of market share, branches, and Automated Teller Machines (ATMs). The report underscores the significant role of PSBs across various banking metrics compared to their private sector counterparts.
According to the report, PSBs control over 63 percent of the total ATMs in the country, whereas private banks manage only 35 percent. This extensive ATM network underscores the reach and accessibility of public banks.
In terms of deposits, public sector banks also maintain a significant lead, holding 59 percent of the total deposits made by the public. In contrast, private banks account for only 32 percent of total deposits. This substantial deposit base reflects the higher trust placed by the public in PSBs.
The digital banking landscape in India also sees PSBs at the forefront, with public banks issuing over 54 percent of all credit cards in the country. Private banks, on the other hand, hold a 37.8 percent share of the credit card market.
Among individual banks, the SBI stands out as the leader in all key metrics. SBI boasts the highest share of deposits, operates the most extensive network of ATMs, and has issued the largest number of credit cards.
The report also highlights the efficiency of Indian banks, noting significant improvements over the years.
Efficiency rate
Public sector banks operate at an 82.76 percent efficiency rate, compared to private banks’ 79.59 percent. The overall productivity of the sector has seen a growth of around 6 percent in Total Factor Productivity (TFP), primarily driven by higher efficiency rather than technological advancements.
“PSBs are the leaders, operating at 82.76 percent efficiency, while private banks operate at 79.59 percent. The overall productivity for the period has witnessed a 6 percent increase in TFP growth, mainly due to higher efficiency changes and lower technological progress,” states the report.
Private banks shine
Despite the dominance of PSBs, private banks also play a crucial role in the banking sector. They offer a diverse range of services and contribute significantly to the competitive landscape. Additionally, the emergence of payment banks, small finance banks, and Regional Rural Banks (RRBs) has further diversified the banking sector. These institutions provide specialized services tailored to underserved areas and populations, enhancing financial inclusion across the country.
Overall, the report underscores the dominant position of PSBs in India’s banking sector while acknowledging the important contributions of private banks and other financial institutions in fostering a competitive and inclusive financial environment.
