Telecommunications will remain the largest overall spending category at 122 billion rupees in 2013. However, it will be overtaken by external IT services spending the following year.

Software is forecast to achieve the highest growth rate amongst the top level IT spending categories - to exceed 18% in 2013, with growth of 24% predicted for desktop software and 23% for enterprise resource planning, supply chain management and customer relationship management.

Vittorio D'Orazio, research director, Gartner, says: "Modernisation and legacy replacement remain major issues for many banks as the gap widens between front-office and back-office services. We see increasing adoption of packages, especially for 'lite' core banking systems to address modernisation and replacement."