For an Indian banking system already in turmoil before the outbreak of the global pandemic, the COVID-19 crisis represents an especially stern test. In response to the perceived threat, India’s companies are fleeing to the safety of the country’s largest banks.

“Even before COVID-19, Indian companies were worried about the stability of some banks and their own access to funding and liquidity,” says Gaurav Arora, Head of Asia at Greenwich Associates and co-author of A Flight to Safety as Indian Banks Navigate Tumultuous Times. “Now faced with an unprecedented economic shutdown, many large and middle market companies are joining consumers in moving business to India’s biggest and presumably safest banks.”

Crisis Shifts the Competitive Landscape

The new Greenwich Report analyzes how the COVID-19 crisis and the many other challenges facing India’s banking sector are affecting the competitive positioning of individual public- and private-sector banks—and the solvency of the industry as a whole. It also presents the complete list of 2020 Greenwich Leaders in Indian Large Corporate and Middle Market Banking, many of which are best positioned to weather the crisis and even gain ground during this period of disruption.

Public Sector Banks

At the top of the list of India’s biggest and presumably most stable bank is State Bank of India (SBI), which was benefiting from companies’ worries about the stability of other public- and private-sector banks before the COVID-19 crisis. SBI’s lower cost of funding gives it a distinctive advantage, and Greenwich Associates data show that the bank has been steadily improving in service and relationship quality. “That improvement makes it an increasingly viable alternative for companies dissatisfied with the service or credit policies of their current banks during the crisis,” says Winston Jin, Greenwich Associates consultant and report co-author.

Private Sector Banks

Even before the COVID-19 crisis, India’s biggest private sector banks were winning business from their smaller private-sector counterparts, due in large part to fallout from the Yes Bank restructuring. Importantly, the spike in demand for digital banking solutions caused by the COVID-19 lockdown plays to the strength of these banks and could actually create opportunities to capture new relationships, as long as their balance sheets remain relatively strong and they are able to continue lending to hard-pressed companies.

Click here for the list of 2020 Greenwich Leaders in Indian Large Corporate and Middle Market Banking.