Key Highlights
- 12.2% — PSBs advances growth in FY25 (YoY).
- 9.5% — PVBs advances growth in FY25 (YoY).
- 51.8% — PSBs share of advances as of March 2024 (down from 74.9% in March 2011).
- Household deposits: 67.6% at PSBs vs 52.1% at private banks.
- Deposit market share: PSBs saw only a marginal decline of 56 bps in FY25 despite private sector competition.
The Systematix report points out that PSBs — which once commanded a 74.9% share of advances in March 2011 — had seen that share shrink to 51.8% by March 2024. FY25 marked a notable reversal, with PSBs regaining momentum and outpacing private peers in loan growth for the first time in 15 years.
Credit vs Deposits
While credit expansion accelerated, deposit growth has trailed advances for the third consecutive year, stretching the banking system’s credit-to-deposit ratios. Despite this mismatch, the report finds PSBs relatively better positioned on liquidity compared with private banks.
Outlook and Drivers
Citing CRISIL, the report noted that even with external headwinds — including tariff disruptions affecting exports — banking sector advances are projected to expand by about 11–12% in FY26. Systematix attributed its comfort on future growth to continued RBI measures to improve liquidity and government initiatives aimed at boosting economic activity.
Liabilities and Retail Strength
On the liabilities side, PSBs managed to largely hold their ground in FY25, suffering only a minor 56 basis-point decline in deposit market share despite aggressive competition from top private lenders. Branch expansion after prior consolidation helped PSBs mobilise deposits. Importantly, PSBs continue to rely more heavily on household deposits — which account for 67.6% of their deposit base versus 52.1% for private banks — underscoring PSBs’ retail franchise strength.
Overall, the report suggests a cautiously optimistic outlook: PSBs have regained lending momentum, but sustained deposit mobilisation and continued liquidity support will be crucial to maintain balanced growth.

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