PSU bank: overtake private lenders in the market for housing, vehicle, and personal loans JM Financial

PSU bank: According to a JM Financial research, public sector banks (PSBs) are gradually overtaking private sector lenders in important retail credit categories including personal, house, and vehicle loans.

According to the research, increased average ticket sizes, better asset quality, and a slow rebound in loan growth during the first half and second quarter of FY26 helped PSBs strengthen their position in terms of disbursement market share across both the secured and unsecured lending sectors.

It said “In terms of disbursements market share, PSB gained in personal, home and auto loans” .

Disbursement growth in the unsecured lending category, especially personal loans (PL), reversed the decline seen in FY25 and increased significantly in 1H and 2QFY26.

In the first half of FY26, personal loan disbursements increased by around 23% year over year, and in the second quarter, they increased by 35%.

In 2QFY26, system outstanding loans grew by 12% year over year, up from 9% growth in FY25, although growth was still less than the historical peak of more than 25%.

In this market, PSBs did better than other lenders, with personal loan disbursements rising 77% annually. In 2QFY26, their market share by value increased to 36%.

With 91% of the volume and 37% of the value market share, non-banking financial firms (NBFCs) continued to rule the industry, although PSBs saw significant growth as a result of their emphasis on larger ticket-size loans.

With PSBs’ average disbursement ticket size jumping 29% year over year to Rs 7,17,000 in 2QFY26, the research said that banks are becoming more focused on higher loan amounts.

Lenders’ asset quality also improved; total PAR 31-90 decreased from 1.8% in 1QFY26 to 1.6% in 2QFY26. All lenders and ticket sizes showed improvement in early delinquencies.

Home loans saw a rebound in the secured lending market as well. In contrast to FY25’s 3% growth, home loan disbursements increased by around 11% year over year in the first half and 14% year over year in the second quarter of FY26.

A 6% year-over-year rise in disbursement volumes, as opposed to a 5% decrease in FY25, was the primary driver of this gain.

With 50% of origination value in 2QFY26, up from 43% in FY25, PSBs maintained their growth in the home loan market.

With disbursements beyond Rs 7.5 million representing roughly 40% of the total value, the category also clearly experienced a move towards higher-ticket loans, indicating the need for bigger residences in the face of growing real estate costs.

The survey also said that, with the exception of the smaller ticket-size group, asset quality trends in house loans were consistent or improved among lenders.