Home Loan Market Update: Public Sector Banks Overtake Private Lenders in April–June Quarter

State-run lenders expand share in housing finance with new data from CRIF High Mark report, August 2025

Who would have imagined that public sector banks in India would outpace private lenders in home loans after years of lagging? The CRIF High Mark report published in August 2025 has shown exactly that. It recorded the performance of banks in the first quarter of FY26 (April to June 2025). 

The report shows public sector banks outperform private lenders in home loans during the first quarter of the financial year 2025-26.

Public Sector Banks Secure The Lead

The report stated that public sector banks, also called PSBs, grew their share in outstanding home loans from 37.6 percent in June 2024 to 46.2 percent in June 2025. Private sector banks, also called PVBs, lost ground. Their share fell from 35.2 percent in June 2024 to 28.2 percent in June 2025.

This sharp movement marks one of the fastest shifts in India’s home loan market in the last decade. Experts attribute this trend to rate cuts, government backing, and strong branch networks.

Market Share Numbers Show A Clear Gap

The growth story becomes clearer when comparing quarter-wise numbers.
 

The gap widened from just 2.4 percent in June 2024 to 18 percent in June 2025. This shows that PSBs are not only winning new customers but also pulling borrowers away from private banks.

What Does The Report Mean? 

The CRIF High Mark report is a quarterly market tracker. It checks who is lending more, how big the loans are, and how borrowers are repaying. In India, PSBs are banks owned by the government. PVBs are privately owned banks. Housing finance companies or HFCs are separate lenders that focus only on home loans.

This report explained that PSBs have started dominating even in areas where they were once weak.

Rise In New Loan Accounts

The growth of PSBs is not limited to the value of loans. It is also about new accounts. Their share in fresh home loan accounts increased from 36.5 percent in April–June 2024 to 41.9 percent in April–June 2025.

Private banks fell from 25.2 percent to 22 percent in the same period. This means PSBs are serving more first-time borrowers, while private banks are losing their customer base.

Loan Ticket Size Trends

Average loan ticket size is the average amount of money given per loan. It gives an idea of what kind of borrowers each bank is serving.
 

Private banks continue to keep bigger loans in their portfolio. Their average size is higher at ₹41 lakh. PSBs are focusing more on the middle-income group with loans of ₹35.3 lakh on average. HFCs remain at the lower end with ₹24.6 lakh.

Stress Levels And Repayment Issues

A strong market share also comes with challenges. The report revealed that PSBs have higher delinquency levels. Loans overdue by 31–90 days stood at 2.85 percent for PSBs in June 2025. For PVBs, it was only 1.04 percent.
 

This shows PSBs are carrying more stressed accounts. Private lenders, while losing share, are maintaining cleaner books.

PSBs Enter High-Value Loan Space

A surprising change came in the high-value loan category. In home loans above ₹75 lakh, PSBs’ share rose from 38 percent in June 2024 to 51 percent in June 2025.

Private banks slipped from 44 percent to 33 percent in the same period. HFCs stayed flat at 12 percent.

This proves that PSBs are no longer restricted to affordable housing. They are also capturing urban borrowers with larger housing needs.

This shift links to earlier coverage by LoansJagat. In June 2025, LoansJagat reported rising PSU bank share in home loans. PSUs had pushed share to 46.4% from 45.1% by end of FY25. Private banks fell to 53.6% from 54.9%. That article traced a steady return of PSUs in home finance. The new CRIF data confirms that. The trend is real. It is not temporary.

Government Policy And Bank Response

Government policy has been a key factor behind this trend. In March 2025, the Reserve Bank of India revised the priority sector lending norms. Housing loan limits under PSL were raised. This allowed PSBs to lend larger amounts that still counted as priority sector.

PSBs acted fast and used their wide reach. Private banks, however, did not react quickly. They stayed focused on select urban borrowers. This created room for PSBs to capture a bigger market.

Rate cuts also helped. The Reserve Bank of India cut the repo rate three times in 2025. The June 2025 cut of 50 basis points pushed several PSBs to reduce lending rates. This pulled many new borrowers towards state-owned banks.

Broader Growth Pattern

The April–June 2025 numbers are part of a larger trend. In FY25, PSBs recorded 13.1 percent growth in total loans, while private lenders managed only 9 percent.

This shows PSBs are not only growing in housing finance but also in retail loans like auto loans and education loans.

Conclusion

The Indian home loan market has entered a new phase. Public sector banks have taken a clear lead in both loan value and new accounts. Their market share in June 2025 shows a sharp jump compared with June 2024.

Private banks, once seen as the leaders in this space, are losing share steadily. They still have stronger control over larger loan sizes and better repayment quality. Yet the overall direction favours PSBs.

Government support, policy changes, repo rate cuts, and wide networks have changed the balance of power. For now, PSBs have rewritten the housing finance story of India. The coming quarters will decide whether private lenders can bounce back or whether this lead by PSBs will become permanent.

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