PSU Banks Lead in Home and Auto Loans
Public sector banks (PSUs) have recently strengthened their position in the Indian personal loan market, particularly in home and auto loans. As retail credit demand rebounds, these banks are increasingly preferred by consumers. In the second quarter of FY26, retail loans witnessed a remarkable growth rate of 18% compared to the previous year, showcasing a robust recovery in the lending sector.
One of the standout figures from the report is the surge in home loan origination, which reached an impressive Rs 3.02 lakh crore. This represents a 25% increase from the previous quarter, driven by a significant rise in loan volumes. Notably, loans exceeding Rs 75 lakh now contribute to nearly 39.4% of total home loan originations, indicating a clear shift toward higher-value credit options.
Public sector banks have captured a remarkable 50% of the market share in home loans, as per data from CRIF High Mark. This shift reflects not only changing consumer preferences but also the effectiveness of PSU banks in meeting the growing demand for secured loans.
The auto loan market has also seen an upturn, with portfolio growth rising to 16.3% year-on-year. Disbursals for auto loans increased to Rs 96,000 crore, marking a 15.9% rise from the previous quarter. The average loan size has also gone up to Rs 8.7 lakh, highlighting an increasing inclination toward larger loans. Here too, PSU banks expanded their market share to 40.4%, while non-banking financial companies (NBFCs) continued to dominate smaller loan segments.
Gold loans are another area experiencing growth, with outstanding portfolios jumping 35.8% year-on-year to Rs 14.5 lakh crore. This surge can be attributed to stricter lending norms for unsecured credit and a rising demand for quick, collateral-backed financing amid high gold prices. Interestingly, while NBFCs lead in the volume of gold loans, PSU banks are taking the lead in terms of loan value.
Sachin Seth, chairman of CRIF High Mark, emphasized that these trends reflect strong consumer demand and robust lender performance. He stated, “India’s retail credit cycle is on a stable footing, led by a decisive shift toward secured lending.” This indicates a more responsible approach to lending, which could reshape the financial landscape in the coming years.
In summary, the rise of public sector banks in the personal loan market underscores a significant transition in consumer borrowing patterns in India, pointing towards a future where secured lending takes precedence.
