If the PSBs believe they are at a disadvantage as compared to their lighter and more nimble competitors, they have only themselves to blame. They've watched as NPBs have leveraged technology to make up for lack of size. That is easier said than done. In contrast, all of HDFC Bank's 61 branches are connected. Not only will SBI have to invest in time, effort, and money to network its other branches, it may realise after doing so, that some of these tributaries didn't deserve to exist in the first place.
Customers perceive PSBs as the dinosaurs of the Indian financial system,'' says a banker.
PSBs as have-beens, a fact that is evident from the performance of their scrips. The services imperative Softening interest rates have spelt doom for the interest-income driven business model most PSBs favour. To protect and grow the bottomline, then, PSBs will have to reduce their cost of operations and increase their revenues from fee-based services. Most NPBs and foreign banks have been able to achieve the first, by leveraging technology to prune transaction costs, and the second, by aggressively marketing new service offerings. Narang of Oriental Bank of Commerce still speaks of increasing the deposit base and candidly admits that ''we are not concentrating on fee-based services''.