New Delhi: The private sector banks have made tremendous strides in the last few years. It was in mid 1990's when Indian banking scenario witnessed the entry of some new private sector banks and in the period between 2002 -2007 these banks have grown by leaps and bounds. They have increased their incomes, asset sizes and outperformed their public sector counterparts in many areas.

This growth was accompanied by a rapid branch expansion. The network of private sector bank grew at almost three times of all scheduled commercial banks and more than four times that of public sector banks (refer to the table below). The star performers among these banks were the Centurion Bank of Punjab (CBoP), HDFC Bank, ICICI Bank, and the Axis Bank (formerly UTI Bank). These big four expanded their branch network at a rapid rate of 14-16 percent per annum in terms of compound growth rates.

Another trend in the banking sector during this period was the increase in staff strength by private sector banks, while the public sector banks witnessed a decline in the number of employees. The private sector banks recorded a compounded growth of 24% in their staff strength. The decline in public sector bank staff can be attributed to restructuring and adoption of IT infrastructure.

Private sector recorded a growth ranging from 30% to 68% in terms of capital, reserves and surplus. The deposits increased in the range of 32% to 51%, while the advances showed a growth trend between 39% to 71%. The net profits by private sector banks recorded a compound annual growth of 27% to 36%. The table below shows the progress of private sector banks:

The mandate is pretty clear, Private Sector Banks have clearly outgrown their public sector counterparts in all these parameters and it looks like that the trend will continue in the near future.