{"id":19347,"date":"2020-09-03T08:03:55","date_gmt":"2020-09-03T08:03:55","guid":{"rendered":"https:\/\/bengalnewstimes.com\/?p=19347"},"modified":"2020-09-03T08:03:55","modified_gmt":"2020-09-03T08:03:55","slug":"private-banks-to-gain-more-market-share-in-medium-term-bfsi-news-et-bfsi","status":"publish","type":"post","link":"https:\/\/bengalnewstimes.com\/?p=19347","title":{"rendered":"Private banks to gain more market share in medium term, BFSI News, ET BFSI"},"content":{"rendered":"

<\/p>\n

ETBFSI Desk<\/em><\/strong><\/p>\n

Private banks<\/a> have had stronger growth as compared to their public sector peers over the years. This has been reflected in higher loan CAGR of 19.6% as against 8.5% of PSBs. PVBs have also been better capitalised and been surrounded with fewer asset quality problems. And these some of the reasons why Fitch Ratings<\/a> believes that PVBs are likely to gain market share<\/a> in the medium term.<\/p>\n

\u201cPrivate banks’ loss absorption buffers, in particular enhanced capital bases, strengthen their ability to recognise losses up-front with less disruption in their efforts to accelerate market-share gains. However, we do not expect immediate gains as the sector’s credit growth is likely to remain subdued, and will only resume meaningfully once a sustained recovery from the pandemic<\/a> gets underway,\u201d said Fitch. <\/p>\n

In the last five years, before the coronavirus<\/a> pandemic, PVBs successfully managed to increase their market shares by 14.4pp and 18.5pp by assets and loans while PSBs were struggling with ballooning impaired loans, larger losses and weaker capitalisation. <\/p>\n

Another reason that has helped the private banks to consolidate their market positions in the last few years is the government-led merger of state-owned banks. Fitch, however, feels that even despite the merger \u2018state-owned banks\u2019 market shares will continue to erode if they do not raise adequate capital to absorb future stress and support growth\u2019.<\/p>\n

During these difficult economic environment, some Indian banks did raise capital but again that has been limited thus far to private banks, which collectively raised $6.3 billion in the past three months. While state banks have announced their intentions to raise fresh equity, they have not gone further than routine board approvals nor given clear indicati<\/p>\n<\/div>\n