As per the Fitch Ratings, large private banks are expected to maintain the decade-old trend of acquiring market share from state banks, whose growth has been held back by moderate capital buffers.
The financial performance of state-owned banks has witnessed a significant improvement from historical laws; however private banks are in a better position due to various factors such as higher capital buffers, excellent underwriting, and increase diversified and profitable business mix.
As per the report by Fitch Ratings, the State Bank of India is the only public sector bank that can efficiently compete with private banks as it has much franchise, a strong pricing power, and an expanded product mix. It has been said that most of the state banks are expected to witness an erosion of market share. The key reasons are a lack of pricing power, moderate capital buffers limiting load growth, and poor management execution.
