MUMBAI, Aug 11: A new breed of private banks is nibbling away at the market share of large public sector and foreign banks in India, bankers said on Monday.

"Prior to 1994, foreign banks were the only benchmark for excellence - the ambience, technology, courtesy," said PH Ravikumar, vice-president of ICICI Banking Corp.

But India's new private banks now offer the same level of service at lower cost in many cities and towns where foreign banks have no branches.

ICICI Bank is one of nine new private sector banks set up after the Reserve Bank of India opened the banking sector to private enterprise in 1994 as part of financial reforms.

Public sector or government-run banks straddle India's banking scene with a market share of more than 80 percent. The new banks have started with a clean slate, with better-paid, better-trained staff. Unlike the extra baggage of older technologies and excess manpower carried by many foreign banks, they are better equipped. An account with the private HDFC Bank means an account with the bank, not just with a specific branch. A customer may operate his account from a branch anywhere in India -- unlike with state-owned banks.

Some of India's leading foreign banks are yet to offer such cross-country connectivity.

"For a Rs 5,000 ($140) average (deposit), we offer a range of conveniences that are state-of-the-art by Indian standards," said Paresh Sukthankar, head of credit and market risk at HDFC Bank, set up by housing finance firm Housing Development Finance Corporation of India Ltd.

Facilities like automated teller machines (ATMs) come free. Opening an account with a foreign bank calls for a minimum deposit ranging from 10,000 to 25,000 Rupees. To open a checking account at a public sector bank, a customer needs only Rs 500. The efficiency of staff and the upmarket interiors of private banks are a stark contrast to public sector banks. "No one ever seems to be at work," said a harassed customer waiting in a queue at a public sector bank in Bombay. "They're all drinking tea or chatting on the phone or clipping their fingernails." Neelam Puri, a school teacher in South Bombay who banks with Punjab National Bank, where her salary is credited, has opened an account with the private Times Bank simply for the convenience of drawing money anytime from its ATM facility.

"The new private banks have already achieved a three percent market share," said Anjana Grewal, general manager, retail banking at the Global Trust Bank Ltd. She said foreign banks' market share had been stagnant at six to seven percent for the last few years. The private banks are targeting the middle class and upper middle class rather than the super-rich. "We are targeting families with an annual income of Rs 100,000 ($2,800) plus," Grewal said.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.