Specialist in Indian Banking and Economic Research

Hemindra Hazari

Is a Securities & Exchange Board of India (SEBI) registered research analyst with over 25 years experience in the Indian capital markets with a specialization in banking and economy research and has managerial experience of establishing profitable equities business, leading and mentoring analysts.  He has worked with prominent foreign and domestic capital market firms such as UBS, Societe Generale, HSBC, ASK Raymond James  and Karvy Stock  Broking and is a regular guest on business media channels and is respected for his non-consensus view on stocks and the market.

Rural India: A Very Different Market, Even in Prosperous Pockets

Thematic (Sector/Industry)

A visit by road to some of the scenic tourist destinations in the mountainous and mainly rural state of Himachal Pradesh highlights the negligible presence of private sector banks and the sheer dominance of government banks, particularly <a href="https://www.smartkarma.com/entities/punjab-national-bank" target="_blank" data-smartkarma-citation="entities:542:1" rel="noopener">Punjab National Bank (PNB IN)</a> and the banking behmoth, <a href="https://www.smartkarma.com/entities/state-bank-of-india" target="_blank" data-smartkarma-citation="entities:160:1" rel="noopener">State Bank Of India (SBIN IN)</a>. Unlike in metropolitan centres in India, where the private sector banks have a significant and highly visible presence along with the government banks, in rural India, which accounts for around 66.5% of India’s population, the private sector banks have a limited presence. From a business perspective such a strategy by private sector banks may be commercially successful, as banking business is concentrated in metropolitan and urban centres in India. Private sector banks in the last 6 years have significantly increased their market share of deposits and loans at the cost to the government banks in these lucrative areas. Disturbingly, it also indicates that the bulk of India’s population residing in rural centres are not a commercially viable opportunity for the new private sector banks, even after a quarter of a century of their existence.<h2> </h2>

A visit by road to some of the scenic tourist destinations in the mountainous and mainly rural state of Himachal Pradesh highlights the negligible presence of private sector banks and the sheer dominance of government banks, particularly Punjab National Bank (PNB IN) and the banking behmoth, State Bank Of India (SBIN IN). Unlike in metropolitan centres in India, where the private sector banks have a significant and highly visible presence along with the government banks, in rural India, which accounts for around 66.5% of India’s population, the private sector banks have a limited presence. From a business perspective such a strategy by private sector banks may be commercially successful, as banking business is concentrated in metropolitan and urban centres in India. Private sector banks in the last 6 years have significantly increased their market share of deposits and loans at the cost to the government banks in these lucrative areas. Disturbingly, it also indicates that the bulk of India’s population residing in rural centres are not a commercially viable opportunity for the new private sector banks, even after a quarter of a century of their existence.  

Where Are the Private Banks in Rural India?