PSU banks increase their market share and surpass private lenders in loan growth

 

According to a report by Mint, India's public sector banks have surpassed their private sector counterparts in terms of lending growth, reclaiming some of the market share they had lost during the previous few years. In December, the loan book of public sector banks increased by 12.4% year over year, while that of private banks increased by 10.5%. As of December 31, 53.5 percent of all loans were disbursed by state-run banks. The report, which referenced RBI data, stated that this is greater than their market share of 53.2% at the end of the September quarter. According to the survey, private lenders' market share fell from 41.8 percent in September to 41.5 percent in December.

Following years of decline, PSU banks' market share has somewhat increased. In June 2017, its market share was 66.7 percent; by June 2024, it had fallen to 53.1 percent. According to the research, this might have been exacerbated by its deteriorating asset quality and capital worries. 

 Public sector banks performed well in the first three quarters of the current fiscal year, according to the finance ministry on February 6. Their April-December net profit of Rs 1.29 lakh crore represented a 31.3 percent increase over the same period last year. With the net NPA ratio at 0.59 percent, the ministry also reported an improvement in asset quality.

According to the ministry, PSBs are well-capitalized and positioned to satisfy the credit needs of all economic sectors, with a focus on the infrastructure, MSME, and agricultural sectors. 

 Improved systems and procedures for credit discipline, the identification and resolution of stressed assets, responsible lending, better governance, financial inclusion programs, and technology adoption are just a few of the outcomes of policy and procedural changes. 

 These actions resulted in the banking industry's overall stability and long-term financial health, which is seen in the PSBs' current performance.