According to sources in the Reserve Bank of India, the State Bank's market share in deposit mobilisation, however, fell less sharply, by 10 basis points from 19.80 per cent to 19.70 per cent up to February 1999.

The bank's market share in SLR investment went up from 21.30 per cent to 24.20 per cent, indicating that the bank's was not finding adequate worthwhile lending opportunities during the year.

In absolute terms, the bank's global deposits grew only by Rs 9,000 crore-- from Rs 1,31,000 crore to Rs 1,40,000 crore--registering only 6.66 per cent growth up to February 1999. However, if the proceeds of the Resurgent India Bonds (RIB) are taken into account, the bank's market sharein deposits has gone up to 21.77 per cent. The SBI mobilised $4.20 billion through the triple-currency RIBs in August 1998.

On the credit front, the bank's advances portfolio registered a little over two per cent growth during the first 11 months of the year. In absolute terms, the gross global credit portfolio went up from Rs 81,000 crore to Rs 83,000 crore. Despite that, the bank will be able to post substantial growth in interest income on the back of growth in the average credit offtake, bank sources said.

The slide in the State Bank's business growth is significant against the backdrop of overall business growth in the industry. Between March 31, 1998, and March 12, 1999, the banking industry has posted a Rs 92,928 crore growth in aggregate deposits. In percentage terms, this works out to 15.3 per cent, way above the SBI's deposit growth.

Similarly, on the credit front, the industry has registered a 9.5 per cent growth (Rs 30,663 crore) in a year marked by tardy credit offtake. Against this, theSBI's credit growth is pegged at around 2 per cent.

Senior bank executives have attributed the fall in market share in credit to the bank's plan of a deliberate "downsizing" of assets and prudent risk management. "We want to pare out exposure in certain areas. Besides, the deposit liability and the advances portfolio cannot be considered the only parameters of a bank's health. One must focus on benchmarks like return on assets and return on equity, etc," sources said.

The bank's deposit mobilisation has been affected by the lowering of term lending rates. At present, SBI offers the lowest interest rate on term deposits among all public sector banks. It has experienced a flight of corporate deposits in February and March following a cut in term deposit rates, sources said.

On the positive side, the gross yield on resource operations has gone up and the percentage of non-performing assets has gone down. The bank has also slashed its other expenditure by 10 per cent during the year, resulting in netsavings of Rs 120 crore. In December 1998, its net NPAs stood at 6.31 per cent and capital adequacy ratio at 13.81 per cent.

No cause of concern

The decline in market share is a consequence of increased competition. However, it may not necessarily be a bad thing for SBI. This is because, given the economic downturn, there are not many avenues for safe deployment of funds. Increased credit may, therefore, merely translate into higher non-performing assets. What is important is not the level of growth of assets and liabilities, but the bank's return on capital employed.