A new report from US rating agency Moody's says that Indian public sector banks have been yielding ground to their private sector rivals in the last dcade of fierce competition for market share.

It said nationalised banks had lost on an avergage 1 per cent each year for the past 15 years to their private sector rivals led by ICICI bank, HDFC and Axis Bank.

Moody's noted that despite the constraint of limited branches, private sector and foreign banks had been competing effectively by providing  quality banking services, superior infrastructure and distinctive product portfolio to boost their market share from 17.5 per cent in terms of total assets in 2003 to 21.5 per cent in 2007.

In the same period the share of public sector banks was pushed down from 75.6 per cent in 2003, to 70.5 per cent in 2007.

The flexible nature and high-end infrastructure of the private and foreign banks enabled them to provide better services, compared to the nationalised banks, whose inefficient labour force and outdated human resource infrastructure prevented them from meeting the onslught of their smaller but more aggressive competitors.