Private banks losing market share across segments, Public sector banks, NBFCs gain in secured loans: JM Financial

The report highlighted that in FY25, PSBs gained 170 basis points (bps) in market share in terms of disbursement value, while private banks lost 140 bps year-on-year. NBFCs also made gains, with their share rising by 60 bps to 30.1 per cent.

It stated, "In terms of market share, NBFC/HFCs have gained while private banks have lost across segments".

The competitive landscape has shifted in favour of PSBs, with their share in origination value rising to 43 per cent in FY25 from 37 per cent in FY24.

In contrast, private banks saw a decline in their share from 37 per cent in FY24 to 30 per cent in FY25. This shift indicates that PSBs are now playing a larger role in loan origination compared to the previous year.

When it comes to borrower profile, banks are focusing on higher ticket size loans, while NBFCs are catering more to low and mid-ticket size loans.

In the credit card segment, private banks still dominate, with about 70 per cent of new card issuances in FY25 coming from them. This is up from 61 per cent in FY21.

However, PSBs have lost market share in unsecured personal loans (PL) but gained in secured segments such as home loans (HL) and auto loans.

This suggest that PSBs are focussing on secured loans like home and auto while Private banks are gaining in personal loans and credit cards.

However, in PL, private banks have been cutting back on small-ticket size loans, resulting in a 30 per cent year-on-year increase in average ticket size (ATS).

On the other hand, NBFCs continue to gain share in the PL segment by offering smaller ticket loans. In FY25, the ATS for NBFCs has further declined.

The report has flagged concerns about loan quality, particularly in the unsecured segment, as both early and late delinquencies are deteriorating.

Moderation in disbursement growth during FY25 is expected to impact overall loan growth in FY26 across lenders. As NBFCs continue to gain market share, their loan growth is likely to remain ahead of banks, especially private banks. However, the quality of growth for NBFCs needs close monitoring. (ANI)