Banks cannot ignore weak spots: S&P

The banking sector in India is highly fragmented, with 53 domestic banks accounting for about 93 per cent of the system’s assets. The top 10 banks together account for 66 per cent of the system (as of March 31, 2006), with the remaining 27 per cent market shared between 43 banks. The banking business benefits from scale, especially with the increasing role of marketing- and technology-based systems. With about three-fourths of the banking systems’ assets in the hands of 29 public sector banks, a meaningful consolidation is not possible until this segment is included in the process. Hence, it is the government that determines the extent and speed of consolidation in the Indian banking system.