PSBs continue to grab higher share in incremental credit growth: RBI

The public sector banks (PSBs) further increased their share in incremental credit to 59.7 per cent in September 2025 from 57.3 per cent in March 2025 and 54.0 per cent a year ago, according to the Monetary Policy Report.

 

The report said across bank groups, the credit growth of state-run remained higher (11.4 per cent) than that of private sector banks (PVBs) (9.4 per cent), while credit growth of foreign banks decelerated. Reserve Bank of India releases six-monthly monetary policy report alongside Monetary Policy Review.

 

On an annual basis (as on September 19, 2025), PSBs continued to account for the largest share of the incremental credit and their share rose further vis-à-vis PVBs and foreign banks, it said.

 

Bankers said the increase in market share in the last 18 months is the outcome of a combination of factors like changes in macro environment, improving capital and financial profile as well as better governance and revamp in systems.

 

While the extensive branch-network gives edge for state-owned banks, they have also reformed processes, invested heavily in digital banking and are fashioning innovative products to face competition especially in the retail credit segment, they added.

 

Monetary policy report said growth in non-food bank credit of scheduled commercial banks (SCBs) decelerated to 10.2 per cent (Y-o-Y) as on September 19, 2025 from 13.0 per cent a year ago, although an uptick in momentum was witnessed in Q2 (quarter ended September 2025).

 

Disaggregated trends in bank credit show moderation in credit growth across sectors. Although industrial credit softened, it remained modestly above its historical 10-year average, with nascent signs of growth uptick in recent months.

 

Despite moderation in growth, personal loans and services sector credit remained the main drivers of overall bank credit growth. Agricultural and allied activities registered muted credit growth, with gradual firming up in recent months, it added.