Big banks gain share in corporate lending
Large and mid-sized companies relied upon the big banks for their funding needs during the pandemic, helping accelerate consolidation in the corporate banking space.
In a report published by “Coalition Greenwich”, a part of rating agency CRISIL, companies said the country’s largest lender State Bank of India (SBI) has done the best job in helping them mitigate Covid impact. Among private sector players, Axis Bank and HDFC Bank provided the most funding support, and among foreign banks, Citi and HSBC were their top funding sources.
“The fact that India’s biggest banks were able to quickly marshal the financial, operational, and technological capabilities required to provide that assistance is strengthening their relationships with companies,” the report noted.
In the large corporate banking segment, SBI, HDFC Bank, and ICICI Bank emerged as the “2021 Greenwich Share Leaders” while Axis Bank was the “2021 Greenwich Quality Leader”.
Among foreign banks, JP Morgan was the quality leader while Citi, Standard Chartered, and HSBC were share leaders.
The corporate banking space had started consolidating even before Covid, driven by the RBI’S steps on opening current accounts of corporates and others.
According to the report, in 2016, around 17 per cent of large and mid-sized corporates were using Axis, HDFC, and ICICI Bank as their lending partner. Come 2020, this share went up to 25 per cent, with these large private banks growing at a rate of close to 12–13 per cent YOY.
On the other hand, SBI defended its position in the years leading up to the pandemic but in 2020 it pressed the accelerator.
“Now, nearly a third of corporates cite SBI as one of their top 7-10 corporate banks, and 30 per cent named SBI as a cash management provider,” the report said.
The directive on current accounts also helped SBI and large private sector banks win corporate relationships at the expense of foreign banks.