NEW DELHI: Public sector banks (PSBs) have rapidly lost market share in the higher value segment of the industry, such as credit cards business, where they are offering lower range card variants and in global capability centres (GCCs), to private and foreign banks, according to deliberations at a conclave organised by the finance ministry.The meeting also discussed falling share of current account and savings accounts (CASA) in total deposits of PSBs banks over past four years. “As (they) represent the lowest cost source of funds, their erosion increases dependence on higher – cost deposits, putting pressure on funding costs and margins,” said a paper prepared for the meeting.Bankers discussed how govt-controlled lenders are “structurally under-represented” in the higher value cohorts of the credit card business and majority of them offers a “static”, one size fits all rewards catalogue that does not communicate value effectively.
Public sector banks lose ground to private, foreign lenders in premium credit cards and GCC banking, govt conclave finds
“Corporate travel & expense cards, HNI metal/premium cards and MSME business cards are segments where private and foreign banks (Amex), HDFC, Axis, ICICI having 20-50 variants) and SBI have built dedicated sales, underwriting and servicing capability that most PSBs have not yet replicated at scale,” said a banker. The paper noted that state-run banks have limited structured models for corporate cards, HNI or wealth-led card sourcing and business cards.GCCs are expected to be around 5,000 by 2030 from 2,100 at present and contribute around $150-200 billion to the Indian economy. Largely GCCs maintain core banking relationships with foreign banks and private banks have taken the “lead” in opening current accounts for them. Meanwhile, the near-to medium-term opportunity for PSBs is largely focused on “ancillary” businesses, such as trade finance, payroll banking and retail cross sell to the workforce and to target new GCCs.Specific coverage of multinational companies by designated teams, targeting GCC parent companies through offshore branches or targeting them at the time of their incorporation and offering a specific platform, which bundles products targeting them – are some of the measures being deployed by the private banks to target these GCCs.As a result, it suggested opening dedicated GCC desks within each PSB and public financial institution in the next six months, along with designating branch level relationship managers in the tier II/III cities like Varanasi, Chandigarh, Mysore and Vizag, which are poised to see next wave of GCC expansion.
