The Hindu Business Line : Big ticket deposits: Private banks doing better

BY the year 2000, private banks had managed to capture18% of all institutional deposits with the banking system. Rs 36,000 crore out of a total of Rs 2,04,000 crore — even though they had (and have) a relatively small network of branchesand only 11% of all institutional deposit accounts on their books.

The average amount per account on their books, Rs 1.95 lakh, was well above even the corresponding figure for State Bank of India, Rs 1.12 lakh. In short, it was the high value accounts that they had managed to wean away.

Foreign banks had been able to wrest only 8 per cent of institutional deposits, but since the accounts they brought on to their books were larger than even the typical private sector account, this gave them an average deposit per institutional account of more than Rs 8 lakh.

By 2003, the latest year for which figures are available, the balance had swung even more in favour of private banks, at the cost of public sector banks.

Private banks now accounted for almost 30% of all institutional deposits, and these accounts had an average outstanding of Rs 3.32 lakh as against Rs 1.95 lakh in 2000.

Foreign banks still had only 8% share in total institutional deposits, but now the average size of deposit for them had gone up to Rs 10 lakh, in keeping with the general trend of increasing balances in institutional accounts.

Public sector banks, in particular SBI, seem to have been consistently losing ground mostly to private banks, but to some extent to foreign banks as well. In absolute terms they have managed to do well.

Between 2000 and 2003, there was a large jump in the quantum of institutional deposits held by them, from Rs 1,50,000 crore to Rs 2,15,000 crore, and in the outstanding balance per account, from Rs 1.04 lakh to Rs 1.40 lakh.

But in relative terms the picture does not look as good.

There was a sharp fall in the proportion of total institutional deposits held by them, from 74% to 62%.

To get the full significance of these trends, one must bear in mind that institutional deposits are of a bulk nature, and therefore less costly to service than individual deposit accounts.

Furthermore, the cost of funds may also be somewhat lower, since many institutions are not allowed to keep their money in savings accounts.

For them it is a choice between fixed deposits and zero interest current accounts.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
ICICI business catalyst facility

Rupee tad firmer; bonds buoyant

IndusInd Bank to launch dollar remittance product

Cisco to scale up SBI's IP telephony network

Big ticket deposits: Private banks doing better

Mergers will create jobs: Chidambaram

Nabard employees strike work to stall dilution of DFI status

Second day of Nabard strike

Time to compress rural credit delivery system

Raghuvanshi Co-op Bank depositors allowed to claim up to Rs 1 lakh

Banks gung-ho on property funds