State-owned banks widen reach quicker than private lenders

Bank ATMs have increased due to the rural financial inclusion programme

: Public sector banks have increased their presence across the country—in terms of ATMs and points of sale devices—far faster than private sector banks have, recent data released by the Reserve Bank of India shows.

The data—comparing private sector and public sector banks on various parameters such as the number of ATMs, points of sale (POS) devices, credit and debit cards outstanding, and the value of the transactions done via these cards—shows that public sector banks have steadily increased their share in most of these parameters over the last four years.

There are 27 public sector banks and 19 private sector banks in operation currently.


The data shows that there were 142,500 public sector banks (PSB) ATMs as of March 2016, which amounts to 72 per cent of the total number of ATMs in the country. This is a vast improvement over the 58,000 PSB ATMs at the end of March 2012. Private banks, on the other hand, only increased their number of ATMs from 30,300 in March 2012 to 55,600 at the end of March 2016, effectively seeing their share in the total fall 10 percentage points over the period.

One common view is that this increase in the number of ATMs by PSBs is due to the government-mandated rural financial inclusion programme. The data supports this, with PSB ATMs making up 86 per cent of all rural ATMs at the end of March 2016, up from 77 per cent in March 2012. But, as the data also shows, PSBs have a higher share of ATMs than private banks in metro, urban, and semi-urban areas as well. Urban non-metro ATMs for PSBs grew from 62 per cent share in March 2012 to 72 per cent by end of 2015, while the share of private ATMs fell from 37 per cent to 27 per cent. Semi-urban India saw almost the same trend.

Private banks were the first-movers in POS devices (that allow card transactions), having issued 85 per cent of these as of March 2012. This proportion saw a significant change over four years. PSBs added nearly four lakh POS devices to the market in that time, compared to an addition of about three lakh by the private banks. This saw the share of public sector POS machines grow from 8 per cent in March 2012 to 34 per cent in March 2016. Private banks’ share fell to 62 per cent.

Credit Cards

The issuance of credit cards and the share in credit card transactions are two areas where the private sector outshines the public sector. There were 195 lakh credit cards in the country as of March 2012, 55 per cent of which were from private banks. The total number of card increased to 245 lakh by March 2016, and the private sector’s share increased to 60 per cent. The PSBs increased the number of credit card they issued in this time, but the growth in their market share was only three percentage points, to 20.6 per cent. Similarly, the private sector accounted for 45 per cent of credit card transactions as of March 2012, which grew to 55 per cent by March 2016.

Debit Cards

The data on debit cards tells the story of public sector dominance. Debit cards issued by PSBs made up 77 per cent of all outstanding debit cards as of March 2012. The state-run banks added 30.3 crore debit cards over the next four years, taking the total number of PSB debit cards to 54 crore.

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Printable version | Feb 21, 2020 5:00:03 PM |

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