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Experts believe that, over the years, private sector banks will likely gain more market share from their state-run counterparts because they have stronger balance sheets, they are less exposed to stressed sectors, have stronger governance and are more competitive. As a result, he said, "the overall health of the banking system will improve because the better banks will be a bigger portion of the market and the weaker banks will become a smaller portion of the market." Public sector banks are already losing market share, particularly the 11 banks that are placed on the Reserve Bank of India's prompt corrective action (PCA) framework, according to Sanjeev Prasad, co-head at Kotak Institutional Equities. Harsh Modi, J.P. Morgan's co-head of Asia ex Japan banks equity research, explained that the retail-focused part of the banking system will likely continue to do well given that the credit penetration in Indian households is still very low and the growing economy will create a "structural tailwind to the retail business."
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