Three of India's top five private banks, including the largest ICICI Bank Ltd, made losses in their retail banking business in the June quarter. Only HDFC Bank Ltd and Kotak Mahindra Bank Ltd made money in the business, data from the banks show.

ICICI Bank's loss in the business was its lowest since January-March 2009. Axis Bank's retail business slipped into a loss of '13.63 crore in the June quarter from a profit of '17.37 crore a year earlier.

The bank had previously recorded a loss in its retail business in the April-June quarter of 2009, during the global downturn, of '49.03 crore.

Yes Bank has never made a profit in the business since April-June 2005.

All three banks did not reply to email questionnaires sent by Mint on these losses.

The Reserve Bank of India (RBI) has raised its policy rates 11 times since March 2010, mainly to tame inflation and curb demand, making borrowing costlier.

Amandeep Goraya, analyst at A Gupta Securities Pvt. Ltd, said banks having to pay more on deposits than last year has added to retail banking expenditure, squeezing profits.

"Rising interest costs may have led to losses on the retail side. Deposits are rising but advances are not keeping pace," he said.

Deposit growth has increased to 17.2% from 14.8% last year, while credit growth has sagged to 18.5% from 20.5%, RBI data shows.

Capital investment in setting up branches and hiring employees is high, making retail banking expensive, said a former vice-president at the retail banking division of a large private bank who is now a banking consultant. "With these fixed costs, if a bank is not able to recover money from credit cards and personal loans, then it leads to more capital erosion because banks have to provide for bad loans according to RBI guidelines," the official said.

HDFC Bank and Kotak Mahindra Bank have handled the pressures better.

HDFC Bank's profit from its retail bank operations rose 19% to '776.68 crore in the June quarter, and Kotak's profit nearly doubled to '135.13 crore from '68.44 crore.

"The success in retail lending, especially for HDFC Bank, was because they concentrated on selling loans only to their clients, which gave them control in monitoring their debtors' credit history together with assuring customer loyalty, which other banks did not do," the unnamed official said.