Slim credit demand sees large PSBs turn focus to mid-sized corporates

With muted demand from large corporates, state-owned banks are shifting focus to mid-sized firms, which offer higher yields and stronger margins despite competition from bond markets

Large state-owned banks, including State Bank of India (SBI), Bank of Baroda (BoB) and Union Bank of India, are shifting their focus to mid-sized corporates amid muted credit demand from large companies. According to bankers, lending to mid-sized firms offers higher yields, supporting margins at a time when they are under pressure due to rate cuts by the Reserve Bank of India (RBI). 

“In the April–June quarter (Q1FY26) we had forgone low-yielding corporate loans. From Q2 onwards, we are planning to focus on the mid-sized corporate segment within the corporate book, which is comparatively higher yielding than large corporations,” said