New Delhi [India], December 23 : Public sector banks (PSBs) are steadily gaining market share from private sector lenders in key retail loan segments such as personal loans, home loans and auto loans, highlighted a report by JM Financial.
The report noted that PSBs have improved their position in terms of disbursement market share across both unsecured and secured lending segments, supported by higher average ticket sizes, improving asset quality and a gradual recovery in loan growth during the first half and second quarter of FY26.
It stated "In terms of disbursements market share, PSB gained in personal, home and auto loans".
In the unsecured lending segment, particularly personal loans (PL), disbursement growth picked up sharply in 1H and 2QFY26, reversing the slowdown seen in FY25.
Personal loan disbursements grew by around 23 per cent year-on-year in the first half and 35 per cent year-on-year in the second quarter of FY26.
System outstanding loans increased by 12 per cent year-on-year in 2QFY26, compared to 9 per cent growth in FY25, although growth remained below historical highs of over 25 per cent.
PSBs outperformed other lenders in this segment, with personal loan disbursements surging 77 per cent year-on-year. Their market share by value rose to 36 per cent in 2QFY26.
While non-banking financial companies (NBFCs) continued to dominate the segment, holding 91 per cent of the volume and 37 per cent of the value market share, PSBs made strong gains due to their focus on higher ticket-size loans.
The report pointed out that banks are increasingly concentrated on larger loan sizes, with PSBs' average disbursement ticket size rising 29 per cent year-on-year to Rs 7,17,000 in 2QFY26.
Asset quality also improved across lenders, with overall PAR 31-90 declining to 1.6 per cent in 2QFY26 from 1.8 per cent in 1QFY26. Early delinquencies showed improvement across all lenders and ticket sizes.
In the secured lending segment, home loans also witnessed a recovery. Home loan disbursements grew by around 11 per cent year-on-year in the first half and 14 per cent year-on-year in 2QFY26, compared to just 3 per cent growth in FY25.
This improvement was driven by a 6 per cent year-on-year increase in disbursement volumes, compared with a 5 per cent decline in FY25.
PSBs continued to gain market share in home loans, capturing 50 per cent of origination value in 2QFY26, up from 43 per cent in FY25.
The segment also saw a clear shift towards higher-ticket loans, with disbursements above Rs 7.5 million accounting for nearly 40 per cent of the total value, reflecting demand for larger homes amid rising real estate prices.
Asset quality trends in home loans remained stable or improved across lenders, except in the lower ticket-size segment, the report added.
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