PSBs surpasses private lenders in credit growth and market share in FY25: Union Bank report
Despite the Credit-Deposit (CD) ratio for Private Lenders accelerating, showing higher credit outperformance, the incremental CD ratio got corrected in FY25, which shows a big slowdown in fresh disbursements.
New Delhi: According to a report issued by Union Bank of India, it has been summarized that the credit growth of Indian Banks is moderated in the recent financial year of 2025 but on a surprising fact Public Sector Banks have gained the market share while outperforming their Private Lenders peers. This gain was observed through the nature and geographical lending criteria. Amid slowing credit growth, the PSBs have gained market share as compared to Private entities.
Despite the Credit-Deposit (CD) ratio for Private Lenders accelerating, showing higher credit outperformance, the incremental CD ratio got corrected in FY25, which shows a big slowdown in fresh disbursements. On the Contrary, the Public Sectors Lenders show more stable disbursements with effective balance sheets.
The Key features points which enable the PSBs to emerge as a leading lending source is the working capital and demand of loans, used by businesses for operational requirements. A major change in the sectoral distribution of credit is observed in the report. Moreover, interventions by regulatory authorities on unsecured lending could have reduced the retail disbursements of Private sector lenders and this opportunity was used by public sector to encourage their incremental market share in terms of retail credit segment, especially in case of housing loans.
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Further, the report shows that state-owned banking entities are also leading in industrial credit, which was not the under the specialization of PSBs.
In terms of geographical location, Public Sectors once again dominated the rural and semi-urban regions.
PSBs secured a large share of incremental credit in rural areas in FY25, emphasizing their presence as key lenders in grassroots levels of the country rural region.
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According to the report findings, the lending organization has achieved benchmark in terms of borrower segmentation, credit to individuals in the current fiscal, showing positive strength of retail banking.
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