July 14, 2021 — The pressures of COVID-19 could be accelerating the consolidation of the Indian corporate banking industry, as the market’s biggest banks prove themselves best positioned to help large and middle market companies overcome crisis disruptions.

Even before the start of the global pandemic, India’s corporate banking market was on a consolidation path, driven by decisive steps by regulators to solidify the country’s banking sector, and the rapid evolution and growth of the leading private banks.“

When the pandemic sent the country into lockdown last year, companies needed immediate assistance from banks, at first to ensure financial stability, and then to keep businesses running,” says Gaurav Arora, Head of Asia at Coalition Greenwich and author of COVID Crisis Could Contribute to Continued Consolidation. “For many companies, it was the biggest banks that stepped in to help.”

The large and middle market companies participating in the 2021 Coalition Greenwich research study cited State Bank of India, along with leading private-sector banks, Axis Bank and HDFC Bank, and foreign banks, Citi and HSBC, as companies’ top sources of support during the crisis.

The fact that India’s biggest banks were able to respond with the financial, operational and technological capabilities needed is strengthening their relationships with Indian companies and widening the divide between themselves and their competitors.

Multiple Trends Pushing Toward Consolidation
In the years leading up to the COVID-19 crisis, the trio of ICICI Bank, Axis Bank and HDFC Bank steadily increased market penetration levels. In 2016, 17% of large and middle market Indian companies were using at least one of these providers as a corporate bank. In 2020, that share climbed to nearly a quarter, with these large private banks growing at a rate of close to 25% year over year. Throughout most of that period, State Bank of India mainly defended itsown market-leading penetration levels. In 2020, however, State Bank of India expanded its footprint. Now, nearly a third of Indian corporates do business with SBI as a corporate bank, and 30% name SBI as a cash management provider.

Several trends have contributed to the pickup in market penetration among the leading banks, including the “mega merger” of the country’s public sector banks, and the Reserve Bank of India’s “circular on current accounts,” which essentially rules that banks can only open current accounts for companies to whom they are also major credit providers.

COVID Crisis Could Contribute to Continued Consolidation from Coalition Greenwich analyzes how these important trends are affecting the competitive positioning of corporate banks in India, and presents the full list of 2021 Greenwich Share and Quality Leaders in Indian Corporate Banking, along with the 2021 Greenwich Excellence Award winners in Indian Corporate Banking.

2021 Greenwich Share and Quality Leaders
In the large corporate banking segment, the 2021 Greenwich Share Leaders in Indian Corporate Banking among domestic providers are State Bank of India, HDFC Bank and ICICI Bank, and the 2021 Greenwich Quality Leader is Axis Bank. Among foreign banks competing in India, the 2021 Greenwich Share Leaders are Citi, Standard Chartered Bank and HSBC, with J.P. Morgan claiming the title of 2021 Quality Leader.

In the middle market space, the 2021 Greenwich Share Leaders among domestic providers are HDFC Bank, State Bank of India and ICICI Bank, and the 2021 Greenwich Quality Leaders are Axis Bank and HDFC Bank. Among foreign banks competing in the middle market segment, the 2021 Greenwich Share Leaders are Standard Chartered Bank, Citi and HSBC, and the 2021 Quality Leaders are Citi, HSBC and Standard Chartered Bank.

Click here for the list of 2021 Greenwich Leaders in Indian Large Corporate and Middle Market Banking and the list of 2021 Greenwich Excellence Awards winners in Indian Corporate Banking.