Mumbai: Public sector banks (PSUs) have strengthened their position in the competitive home loan market, accounting for 50 per cent of total home loan originations by value in September, according to a report by credit information company Crif High Mark. This marks a significant shift, with state-run banks overtaking private sector banks in the housing finance segment.
Growth Driven by High-Value Loans
The report highlighted that nearly 40 per cent of home loans originated in September were above Rs 75 lakh, indicating a trend toward high-value lending. Despite a modest 3.3 per cent increase in the number of active home loans to 2.29 crore, the average exposure per loan has risen, reflecting higher ticket-size lending by banks.
The overall home loan market, the largest segment within retail lending, grew 11.1 per cent year-on-year and 2.1 per cent quarter-on-quarter, reaching Rs 42.1 lakh crore as of September-end.
Consumer Loans Also See Uptick
Apart from housing loans, the report noted a 15.3 per cent rise in overall consumption loans, which reached Rs 109.6 lakh crore in September. Growth was particularly strong in the gold loan segment, which drove faster expansion in the consumer finance market.
However, certain areas of retail lending, particularly consumer durables, recorded slower growth of 10.2 per cent year-on-year, attributed to subdued demand and seasonal factors.
Improved Asset Quality and Responsible Lending
The report highlighted improved asset quality in the consumption loan segment, with the proportion of overdue loans between 31-180 days falling to 3 per cent in September, compared to 3.1 per cent in June and 3.3 per cent in the same period last year.
Crif High Mark Chairman Sachin Seth said, “PSU banks have expanded their market leadership in both value and reach, and regulatory discipline is encouraging more responsible and broad-based financial inclusion across geographies and population segments.”
Implications for the Housing Finance Market
The growth of PSU banks in the home loan market signals a renewed confidence in state-run lenders and suggests that consumers are increasingly opting for reliable and regulated financing options. The shift toward higher-value loans also reflects rising property prices and growing urban demand for premium housing.
As PSU banks consolidate their leadership, industry experts expect continued expansion in high-ticket home loans, balanced growth in consumption lending, and further improvements in loan quality and financial inclusion across India.
