PSU Banks Outpace Private Lenders in 2025 Loan Growth Amid Uneven Demand

• Public Sector Banks (PSBs) showed stronger loan growth (5-12%) in 2025, outperforming private lenders despite sluggish system-wide credit demand.
• Indian Overseas Bank led PSBs with 11.3% growth; State Bank of India posted 4.8%.
• Private banks exhibited wider, uneven growth (3-11%), with some like IDFC First Bank performing well, while others like IndusInd Bank saw contraction.
• Private lenders' struggles attributed to subdued corporate demand, high funding costs, and intense deposit competition.
• Credit growth revival signs emerged in FY26, driven by retail, MSME, and corporate segments, with RBI reporting 11.5% YoY growth by Nov 2025.

Why It Matters: PSBs led 2025 loan growth, but credit demand is reviving, promising stronger overall bank advances in FY26.