July 13, 2022 | Stamford, CT — India’s private sector banks are on the ascendancy. At the top of the corporate banking market, the country’s three biggest private sector banks have in aggregate, matched State Bank of India in terms of market penetration with large and middle-market Indian companies. In addition, smaller private banks are also gaining ground while foreign banks become more selective in the role(s) they play for large and midsize Indian corporates.

The strong growth of the country’s private sector banks is due to a combination of favorable regulation and impressive technological innovation. The Reserve Bank of India's 2020 circular establishing new rules on current accounts – effectively ensuring a minimum size relationship that corporates had with their bank, strengthened the competitive advantage of large corporate lenders. 

Aided by those tailwinds, the combined market penetration of Axis Bank, ICICI Bank and HDFC Bank in domestic cash management has grown to 40% of Indian companies compared to 35% two years earlier. These large private banks also expanded their footprint in international cash management, where large foreign banks also increased penetration with many of those gains coming at the expense of other foreign banks.

This expansion has solidified the position of private sector banks on the list of 2022 Greenwich Share and Quality Leaders in Indian Large Corporate Banking. At the top of the list is State Bank of India. The two private sector banks joining State Bank of India as 2022 Greenwich Share Leaders in the Local Bank category— ICICI Bank and HDFC Bank. Axis Bank and HDFC Bank claim the title of 2022 Greenwich Quality Leaders among Local Indian Banks. 

In the middle market space, the 2022 Greenwich Share Leaders among domestic providers are HDFC Bank, ICICI Bank, and Axis Bank, and the 2022 Greenwich Quality Leaders are Axis Bank and HDFC Bank. Among foreign banks competing in the middle market segment, Citi, HSBC and Standard Chartered Bank are the 2022 Greenwich Share Leaders as well as the 2022 Greenwich Quality Leaders.

ESG: An Opportunity for Indian Banks
Indian banks have an opportunity to deepen relationships with corporate clients and have a positive impact by helping large and midsize companies implement ESG standards and goals. 

Nearly a third of large Indian corporates and almost two-thirds of middle-market companies have yet to establish any ESG goals or targets. In industry segments such as real estate, only about 1 in 5 companies have adopted ESG measures. Across the board, far fewer companies have adopted ESG metrics in their treasury function relative to similar industries in Europe, US and some parts of Asia. Where ESG targets do exist – environmental considerations play a more important role – in line with observations elsewhere globally.

“While companies report foreign banks are the most active in discussing ESG, domestic banks are in a unique position to provide added value on how to best navigate the often confusing world of ESG data and standards in business operations and treasury/ finance practices,” says Gaurav Arora, Head of Asia at Coalition Greenwich and author of Digital Prowess and Regulatory Tailwinds Fuel Rise of India’s Private Banks.  

Click here for the list of 2022 Greenwich Leaders in Indian Large Corporate and Middle Market Banking and the list of 2022 Greenwich Excellence Awards winners in Indian Corporate Banking.