Page 40 - The Indian EYE 060421

Business EYE JUNE 04, 2021 | The Indian Eye 40

is everything okay with indian banks?

Govt says ‘yes’ but the market signs are different

Foreign banks have seen their share of credit cards come down by a third. In terms of value

of transactions, their share has halved as that of private and public sector banks

respectively. HSBC has held
Our Bureau ground better than others with

New Delhi a market share of 1.4% as of
March 2021 (1.5% in ’18) and
he RBI has said that retaining its 1% share of total
banks are better posi- spend.
Ttioned than before in In a sign of crisis in the bank-
managing stress in their balance ing sector, the government has
sheet in view of higher capital strongly condemned the false
buffers, better recoveries and reporting in certain media by
return to profitability. At an “some vested interests” claim-
aggregate level, the RBI has ing that the Centre has purport-
said that the capital of banks is edly asked state-owned banks
enough to meet a severe stress to withdraw funds from foreign
scenario. currency accounts abroad in
In its annual report released anticipation of the potential sei-
on Thursday, the RBI said that zure of such accounts with re-
it has conducted stress tests on gard to the Cairn legal dispute.
banks to check how prepared Condemning all such
they are in a crisis. Although RBI Governor Shaktikanta Das addresses the media source-based reports as false,
until last year many public sec- in Mumbai on Thursday. (ANI Photo) the GOI in a statement said
tor banks were reporting losses that these are totally incorrect
due to provisions for bad loans, ue of transactions, their share ground. In terms of value of reports which were not based
several have turned the corner has halved as that of private and transactions too, foreign banks on true facts. Certain vested
and have reported profits for public sector banks have grown. have a market share of 11.8% parties appear to have orches-
FY21. According to data released in the Rs 72,372-crore monthly trated such misleading report-
In its annual report, the by the RBI, foreign banks had volume. ing, which often relies upon un-
central bank has stressed the 57 lakh credit cards outstand- While private banks have named sources and presents a
importance of vaccinations for ing as of March 2018. At that consolidated their market share lopsided picture of factual and
recovery. It said that with cases time, there were 3.8 crore cred- in the card space, increasing legal developments in the case.
beginning to drop recently, the it cards in India, which gave the their share from 63% to 66%, “The GOI is defending its case
macro-economic costs of this multinationals a market share public sector banks have grown in this legal dispute. It is a fact
wave can be limited to Q1FY22 of 15%. However, despite los- from 21.6% to 23.2% in three that the government has filed an
with possible spillovers into July. ing market share, the foreign years. State Bank of India ac- application on March 22, 2021,
Given the risks arising out banks had significant clout be- counts for almost 80% of all to set aside the December 2020
of the second wave, the RBI cause of the higher value of public sector banks. Overall, international arbitral award in
has asked banks to closely mon- transactions by their customers SBI has 19% of the credit card The Hague Court of Appeal,”
itor their bad loans and prepare who spent more than the av- market, which is still behind the the statement added.
themselves for higher provi- erage cardholder. In 2018, the 24% share of HDFC Bank. The government has raised
sioning. “With the lifting of the foreign banks had monthly card In 2018, American Express several arguments that war-
interim stay on asset classifica- spends of Rs 10,380 crore — a had 3% of the credit card mar- rant setting aside of the award
tion standstill by the Hon’ble 23.4% share. ket in terms of number of cus- including but not limited to
Supreme Court on March 23, Fast forward to March 2021, tomers. But it accounted for the arbitral tribunal improp-
2021, banks’ asset quality will when the total market expand- 10% of all spending by cred- erly exercised jurisdiction over
need to be closely monitored ed to 6.2 crore cards while the it card customers in India. a national tax dispute that the
in coming quarters, with pre- number of cards issued by for- In 2021, their share of cards Republic of India never offered
paredness for higher provision- eign banks stood at 66 lakhs, shrunk to 2.5%, while the share and/or agreed to arbitrate.
ing,” it said. reflecting a market share of of spending declined to 4%. The Centre said it is com-
But foreign banks have seen nearly 11%. It is not just in the Citibank, which had a 7% share mitted to pursuing all legal av-
their share of credit cards come number of cards that the mul- of cards and 9% share of spend, enues to defend its case in this
down by a third. In terms of val- tinationals have been losing saw these fall to 4% and 6%, dispute worldwide.

www.TheIndianEYE .com