New Greenwich Report Shows Indian Banks Closing the Gap with Foreign Providers

Domestic banks are expanding their footprints among India’s largest companies as foreign competitors reposition their business strategies in India and around the world.

A report released today by Greenwich Associates, Indian Corporate Banking: Local Banks on the Rise, shows that growing numbers of the largest Indian companies are turning to local banks like HDFC, State Bank of India and ICICI Bank, which now rival the market’s top foreign banks in terms of market penetration in this prized segment.

Standard Chartered, HSBC and Citi traditionally have been the dominant providers of banking services such as credit, treasury management, trade finance and investment banking to large Indian companies.  However, rising capital and compliance requirements have caused these banks to grow more selective in whom to serve, across Asia, including India. “At the very same time, domestic banks have been closing the quality gap and winning not only spots on Indian companies’ bank lists, but also coveted ‘lead relationship’ roles,” says Greenwich Associates consultant Gaurav Arora.

Amid these changes, HDFC has climbed to the top of the market in terms of penetration among the largest Indian companies (those with annual revenues of at least USD 500 million) and has achieved this largely on the basis of its industry-leading domestic cash management network. State Bank of India has secured the third spot in the market on the strength of its lending and international trade finance businesses. ICICI also places in the market’s top tier, after HSBC and Citi, leveraging a diverse franchise with strengths in cash management, trade finance and FX.

“Just behind these industry leaders is a large group of Indian banks, regional players like DBS Bank, and global banks like Deutsche Bank and Bank of America Merrill Lynch that see India as an important market in Asia,” says Greenwich Associates consultant Paul Tan.  “The global banks continue to dominate key spaces, like regional/global liquidity management, treasury FX and the capital markets businesses. In the flow businesses, we see the leading Indian banks (and the next tier of up-and-coming local competitors) starting to dominate the domestic banking landscape.”