Public sector banks race ahead of private lenders in home loan market in April-June: report

Mumbai, Sep 2 (PTI) Public sector banks grew their home loan market share significantly in the April-June quarter despite witnessing higher incidence of stress, a credit information company said on Tuesday.

Share of public sector banks (PSBs) in the overall home loan outstanding grew to 46.2 per cent in June 2025, from 37.6 per cent in the year-ago period, the report by Crif High Mark said.

Private sector banks' share has reduced to 28.2 per cent from 35.2 per cent during the same period, the report said.

Over the last few months, major private sector lenders have complained about lack of sanity in the home loan market, calling the rate offerings as "irrational". Home loans are the largest component of retail lending because of the high ticket sizes and the strong securities of homes make them relatively lower stressed ones.

The report said PSBs' delinquencies on home loans are the highest, with 2.85 per cent of the outstanding amounts not paid for between 31-90 days.

As against this, only 1.04 per cent of the loans were unpaid for private sector lenders.

The lower delinquency rates at private sector banks indicate "robust underwriting and early risk detection", the report said.

In the case of PSBs, higher delinquency rates were observed in ticket sizes below Rs 35 lakh, the report said.

Lenders seem to be preferring the higher ticket size loans more as compared to the smaller ones, the report said, pointing out that 38 per cent of the originations value were for loans above Rs 75 lakh as against 33.6 per cent in the year-ago period, while the same for loans between Rs 5 and Rs 55 lakh has declined to 31.2 per cent from 34.7 per cent in the year-ago period.

The issuances of new credit card continued on its southward trajectory, declining by 28 per cent on year to 40.6 lakh in April-June.

The company attributed this to regulatory tightening, calibrated risk moderation by lenders, and a strategic pivot toward improving asset quality in unsecured portfolios.

Interestingly, the share of private sector banks in the new card issuances increased to 75 per cent from 71 per cent in the year-ago period, the report said.

"Unsecured lending segments, including personal loans and credit cards, saw a moderation in growth alongside rising risk levels. These developments underscore the importance of proactive risk management and regulatory vigilance, as lenders recalibrate portfoolios to balance expansion with stability," CIC's chairman Sachin Seth said. PTI AA HVA