Indian corporate banking: COVID-19 srisis may contribute to continued consolidation

Indian corporate banking: COVID-19 srisis may contribute to continued consolidation

COVID-19 may be pushing for consolidation in the Indian corporate banking sector, as India's largest banks are best placed to assist large and medium-sized companies through crisis disruptions.

India's corporate banking market was already on a consolidation path before the outbreak of the global pandemic. This was due to the decisive steps taken by regulators to strengthen the country's banking sector and the rapid growth and evolution of the top private banks.

Companies needed immediate assistance from banks when the pandemic put the country in lockdown last year. This was to first ensure financial stability and then to keep the businesses running," Gaurav Arora, Head Asia at Coalition Greenwich, says. He is also the author of COVID Crisis Could Contribute To Continued Consolidation. It was often the largest banks that helped many companies.

Participating companies from the 2021 Coalition Greenwich research found that State Bank of India was cited by both large and medium-sized companies as their top source of support during crisis.

India's largest banks were able respond to the technological, financial and operational needs of Indian companies. This is strengthening their relationships with Indian businesses and increasing the gap between them and their rivals.

Many Trends Pushing for Consolidation

The market penetration of ICICI Bank (Axis Bank), HDFC Bank, and ICICI Bank has steadily increased in the years preceding the COVID-19 crises. 17% of Indian large and medium-sized companies used at least one of these banks as corporate banks in 2016. This share rose to almost a quarter by 2020 as these large private banks grew at an annual rate of nearly 25%. State Bank of India maintained its market-leading penetration levels throughout most of the period. State Bank of India increased its presence in 2020. Nearly a third of Indian corporations do business with SBI to be a corporate bank and 30% use SBI for cash management.

A number of trends have led to a rise in market penetration at the top banks. These include the "mega-merger" of India's public sector banks and the Reserve Bank of India’s "circular about current accounts," which basically states that banks cannot open current accounts to companies that are major credit providers.

The COVID Crisis May Cause Continued Consolidation Coalition Greenwich analyses how these key trends affect the competitive positioning corporate banks in India and presents the complete list of 2021 Greenwich Quality and Share Leaders in Indian Corporate banking, as well as the 2021 Greenwich Excellence Award recipients in Indian Corporate banking.

2021 Greenwich Share & Quality Leaders

The 2021 Greenwich Share leaders in Indian Corporate Banking are State Bank of India and HDFC Bank. Axis Bank is the 2021 Greenwich Quality leader. The 2021 Greenwich Share leaders in India are Citi, Standard Chartered Bank, and HSBC. J.P. Morgan is the 2021 Quality Leader.

The 2021 Greenwich Share Leaders in the middle market space are HDFC Bank and State Bank of India, and ICICI Bank. Axis Bank is the 2021 Greenwich Quality Leaders, while HDFC Bank and HDFC Bank are the 2021 Greenwich Quality Leaders. The 2021 Greenwich Share leaders are Standard Chartered Bank and Citi, and the 2021 Greenwich Quality Leaders are Citi and HSBC.