Bank Deposits: PSBs lose out to Private banks

Nationalised banks in Gujarat seem to be losing out to private banks in terms of bank deposits. Their market share has dropped from 54.61 per cent in the April-June quarter of 2015-16 to 52.38 per cent in October-December quarter of 2017-18. Whereas private banks have increased their market share from 15.97 per cent to 20.24 per cent in the same period.

After demonetisation, deposits in Public Sector Banks (PSBs) grew 9.18 per cent to Rs 3.36 lakh crore, those in State Bank of India (SBI) Group grew 12.93 per cent to 1.37 lakh crore and in private banks, deposits grew by 14.11 per cent to Rs 1.99 lakh crore.

Since then, PSBs and the SBI Group have witnessed massive withdrawals and deposits have not even reached the levels witnessed during demonetisation. Deposits of PSBs and the SBI Group at the end of September-December 2017 quarter stood at Rs 3.32 lakh crore and Rs 1.36 lakh crore, according to the report of State Level Bankers Committee (SLBC) for the quarter. On the other hand, deposits in private banks have risen by 9.42 per cent to Rs 1.28 lakh crore.

"This indicates that there is a decline in depositors' confidence in PSBs. There might be fears of scams, but they happen in private banks also. However, private banks get funds from abroad and they are aggressively wooing bank customers, which PSBs are unable to do," said Prakash Kapadia, spokesman for Taxpayers Protection Council.

Janak Raval, general secretary of Mahagujarat Bank Employees Association attributed the perception of masses about PSBs to different business priorites of PSBs and private banks. "NPAs are higher in PSBs because we lend to riskier sectors such as infrastructure and industries. Private banks focus more on retail loans, where defaults are lower. Private banks do not intend to do the business we are doing," said Raval.

This data proves that private banks want to benefit at the cost of PSBs. There seems to be a systematic plan to damage PSBs. This cannot be tolerated. After the Madhavpura Bank crisis in Gujarat, private banks were busy poaching customers of co-operative banks. Now they are eyeing the businesses of PSBs.
Shailesh Patwari, president, GCCI

Private banks have high-income accounts with them. PSBs also cater to the bottom of the pyramid. So after demonetisation, withdrawals were more from nationalised banks than other banks. The priority of both banks is totally different whether it is about getting deposits or giving advances. We do the riskiest work.
Janak Raval, general secretary, MGBEA