The share of private banks in semi-urban deposits climbed to 26.93% by September, from 25.62% in March. In urban centres, that share rose to 34.98% from 32.94%.
State-run banks have traditionally serviced the hinterland, essentially the semi-urban and rural areas, due to their various social commitments beyond commercial considerations.
However, private sector banks, armed with technology and more flexible products, have started making inroads into these geographies that offer lucrative commercial opportunities.
ICICI Bank, HDFC Bank and Axis Bank, among others, have increased their branch network in the rural and semi-urban areas even before the outbreak of Covid-19, and are benefiting now from the increase in customer base.
Axis Bank, for instance, has a dedicated Bharat Banking division focusing on rural and semi-urban areas. Banks are also coming out with special products targeting the rural rich.HDFC Bank has launched the Pragati Savings Account, a tailor-made offering to address the banking needs of rural and semi-urban populations in the country.Some private banks are also offering higher interest rates on term deposits than public sector banks. Analysts say that a five-year term deposit with a private sector bank could earn up to 7.75%, compared to 7.0-7.5% from a public sector bank. This could also be tilting the scales in favour of private banks in semi-urban and rural geographies.