Now Reading: PSB loan slippages stay under half of private banks in Q1FY27
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PSB loan slippages stay under half of private banks in Q1FY27
Public sector banks posted gross loan slippages of around 0.7% in the first quarter of FY27, less than half the 1.7% reported by private lenders, data from ICICI Securities showed. The gap…
Public sector banks posted gross loan slippages of around 0.7% in the first quarter of FY27, less than half the 1.7% reported by private lenders, data from ICICI Securities showed. The gap widened despite a macro environment marked by currency, commodity and climate pressures, and comes as overall systemic slippages rose to 1.2% sequentially on seasonal factors, though still below 1.4% a year ago.
PSBs also showed improvement in SME slippages in Q1, reversing a deterioration in the preceding quarter, while the SMA pool in microfinance and unsecured segments narrowed. Among private lenders, banks with large gold and SME portfolios, Federal Bank, Karur Vysya, South Indian Bank and City Union Bank, recorded further improvement, as did lenders with MFI exposure such as IndusInd Bank, IDFC First Bank and Bandhan Bank.
Systemic loan growth accelerated to about 18% year-on-year, led by NBFCs at 32%, large industry at 17% and retail gold at 95%. The report estimates full-year FY27 credit growth at around 15%, with PSBs and private banks expected to expand at broadly similar rates. Asset quality in SME, agriculture, crude-sensitive, gold, unsecured, MFI and ECLGS portfolios will remain key monitorables for earnings through the year.
Indian Opinion Analysis
The asset-quality divergence between public and private banks reflects structural differences in portfolio composition: PSBs have reduced their aggressive retail lending in recent years, focusing instead on government-guaranteed and priority-sector loans, which naturally carry lower slippage risk. Private banks, by contrast, hold larger exposures to unsecured personal loans, microfinance, and gold loans, segments that are more sensitive to income shocks and commodity price swings. The ₹90,000-crore ECLGS scheme’s tail-end repayments and the RBI's stricter rules on unsecured lending from November 2023 will test whether this gap persists. The next key signal will be the August 2027 quarterly results, which will show if the Q1 improvement in PSB SME portfolios is sustained through the monsoon-sensitive agricultural season.
Source: bfsi.economictimes.indiatimes.com
This story was synthesised by AI from the source linked above.
