Though foreign banks outperformed domestic banks in quality services, they could not match the latter as public sector banks reigned supreme on the strength of their superior reach.
Domestic private sector banks have also gained at the cost of foreign entities, according to a joint study by the UN Economic and Social Commission for Asia Pacific and Asian Development Bank.
The study found that foreign banks were not a competitive threat in New Delhi, West Bengal and Maharashtra where they had a major presence.
"This shows that competition has emerged only at the fringe since the entry of new banks has been at the lower end," the report said, citing data collected during 1980-1997/98.
The study also found that domestic private banks had gained some market share in these regions, but the impact on PSBs was small and "gained at the expense of foreign banks."
"PSBs have been predominant in UP, MP, Bihar, Orissa, Gujarat and Punjab. Since reforms, no apparent impact has been observed from the new entrants," the study said.