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Indian firms turn to private banks for FX/cash management

Indian companies are increasingly moving away from their core banking partners (and main credit providers) in favour of private banks with better FX and cash management capabilities. Traditionally, Indian corporates kept most of their banking business with their biggest lenders, often state-owned banks. They are now seeking out and hiring banks with the best capabilities in cash management, FX and other critical functions, according to a report, Product/Platform Capabilities Come to the Fore in India, by Greenwich Associates. The study suggests this trend is contributing to the rise of the country’s privately owned banks, which in 2018 surpassed public sector banks in their share of “core” banking relationships with large Indian companies.

The report explains that private banks have invested millions of dollars to create state-of-the art platforms, including attractive new digital capabilities in domestic and international cash management, FX, trade finance, and other essential corporate banking functions. “These investments are starting to pay off,” says Greenwich Associates consultant Gaurav Arora. “As Indian corporate executives discover the quality of these platforms, growing numbers of companies that have traditionally relied on state-owned banks for credit are turning to “non-credit providers” for these products and services.”

According to Greenwich's rank of top banks for Indian large corporates, HDFC Bank, State Bank of India and ICICI are the top three relationahip banks in India.

CTMfile take: This report highlights a trend that's happening - to varying degrees - elsewhere too, as fintechs start to offer cash, FX and other services that are contending with the offerings of traditional partner banks. 

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