Wednesday, August 3, 2016 Stamford, CT USA — India’s domestic “private banks” (privately owned) are increasingly matching—or outperforming—foreign banks, when it comes to the quality of service they deliver to Indian companies. 

That’s one of the key findings of the Greenwich Associates 2016 Indian Middle Market Banking Study. As part of this inaugural annual study, Greenwich Associates interviewed 185 middle market companies about their corporate banking relationships spanning corporate lending, cash management, trade services and finance, foreign exchange, structured finance, interest-rate derivatives, and investment banking.

HDFC Bank is the market leader, with some 56% market penetration (percentage of respondents citing a relationship with the bank). State Bank of India (SBI) is the only public sector bank (PSU) in the top 12, with half the market citing a relationship with the bank. ICICI Bank, Axis Bank, Kotak Mahindra Bank round out the top five. These banks are the 2016 Greenwich Share Leaders in Indian Middle Market Banking. 

“India’s ‘national champions’ are upping their game with mid-to-large companies, going beyond their domestic and credit-centric banking needs,” says Gaurav Arora, Greenwich Associates Head of India Banking and author of the new Greenwich Report, India’s Privately Owned Banks Step Up Their Game.

Quality Leaders
Study participants were asked to rate their deepest banking relationships across 14 “quality” factors. Banks receiving quality scores topping those of rivals by a statistically significant margin were named Greenwich Quality Leaders. HDFC and Yes Bank rank highest for relationship management (RM) quality among India’s privately owned banks. StanChart and Citi also earn top ratings for RM quality, as corporates have come to expect of foreign banks. These four banks share the title of 2016 Greenwich Leader in Indian Middle Market Banking Relationship Management Quality, while HDFC alone claims the title for Institutional Relationship Quality.

“Traditionally, local banks have had a tough time competing with global players in terms of talent,” says Greenwich Associates Head of Asia Pacific, Paul Tan. “That appears to be changing, both in the local banks’ prioritization of coverage qualities and in the foreign bank-trained talent increasingly encouraged to take senior positions in the most sophisticated local banks.”

Privately Owned Banks on a (Prudent) Growth Trajectory
Over the next five to 10 years, emerging privately owned banks like Yes Bank, Kotak Bank and others will be improving and expanding their capabilities and upgrading the quality of products and services they deliver to Indian corporate clients. This steady improvement will continue to narrow the gap between the private banks and global competitors, and will accentuate the discrepancy in service quality between these private players and state-owned banks. 

“For the private banks, we see consistent, prudent growth ahead—and in India, prudent growth is critical,” says Gaurav Arora.