PSU Bank surpasses private lenders in terms of credit growth and market share in fiscal 25: United Bank Report
According to a report by United Bank of India, Indian banks’ credit growth was adjusted in the fiscal year 2025, but Public Sector Banks (PSBs) gained market share, outperforming its private banking (PVBS).
The report added that benefits can be seen both in the nature and geographical nature of the loan. “Credit growth slowed in fiscal 25, but PSB gained market share on PVB,” the report added.
The higher credit (CD) ratios of PVBs were observed to reflect higher credit pushes, but their incremental CD ratios were quickly corrected in FY25, suggesting a slowdown in new spending.
In contrast, PSB sees greater stability and uses its balance sheet more cautiously and effectively.
According to the report, working capital and demand loans that businesses often use for operational needs become a key driver of this beyond performance.
The report notes that there have been significant changes in the departmental allocation of credit. Regulatory interventions on unsecured loans have slowed down private banks’ spending on retail (especially personal loans).
Although public sector banks have used this opportunity to increase their incremental market share in the retail credit space, especially in home loans.
The report notes that state-controlled banking entities are also leading in industrial credit, which is not a specialization of PSB.
Geographically, PSB dominates rural and semi-urban areas.
Public sector banks received significant incremental credit in rural areas in FY25, reestablishing their presence as the main lender in India’s hinterland. In semi-city locations, more than 60% of incremental credit is stuck by PSBs, and even in cities and metropolitan areas, they have managed to capture some share of the loss in fiscal 24 years.
Credit to individuals continues to be on the current financial upward trajectory, according to the report’s findings in borrower segmentation, indicating the strength of retail banking.
