A recent report by the State Bank of India highlights the dominant position of Public Sector Banks (PSBs) in the Indian banking sector. PSBs account for more than 50 percent of the banking business in terms of market share, branches, and Automated Teller Machines (ATMs). This indicates their significant presence and influence in the industry.
Public Sector Banks and ATM Market Share
According to the report, public sector banks hold over 63 percent of the total ATMs in the country. In contrast, private banks manage only 35 percent of the ATMs. This demonstrates the greater prevalence and accessibility of ATMs provided by public sector banks.
Public Sector Banks and Deposits
In terms of deposits, public sector banks maintain a substantial lead, accounting for 59 percent of the total deposits made by the public. On the other hand, private banks hold a smaller share, with only 32 percent of the total deposits. This indicates that people have more trust and confidence in public sector banks when it comes to depositing their money.
Public Sector Banks and Digital Banking
Public sector banks also lead in the digital banking landscape in India. They issue over 54 percent of all credit cards in the country. In comparison, private banks hold a 37.8 percent share of the credit card market. This demonstrates the significant role played by public sector banks in promoting digital banking services.
State Bank of India as the Leader
Among individual banks, the report highlights the State Bank of India (SBI) as the leader in all key metrics. SBI holds the highest share of deposits, operates the most extensive network of ATMs, and has issued the largest number of credit cards. This further establishes SBI’s position as a leading public sector bank in India.
Efficiency of Indian Banks
The report also sheds light on the efficiency of Indian banks, with significant improvements observed over the years. Public sector banks operate at an 82.76 percent efficiency rate, while private banks operate at 79.59 percent. This indicates the commendable efficiency of public sector banks in their operations.
Productivity Growth in the Banking Sector
The overall productivity of the banking sector has seen a growth of around 6 percent in Total Factor Productivity (TFP). This growth is primarily driven by higher efficiency changes rather than technological advancements. The report emphasizes the importance of efficiency improvements in enhancing the sector’s productivity.
Role of Private Banks and Diversification of the Banking Sector
While public sector banks dominate various aspects of the banking sector, private banks also play a crucial role. They offer diverse 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, thereby promoting financial inclusion across the country.
