Private sector banks outperformed public sector banks (PSBs) in deposit growth during the January–March quarter, even as the overall banking system continued to grapple with challenges in mobilising deposits.
According to provisional data from bank disclosures, private lenders recorded deposit growth in the range of 12–17 per cent in Q4FY26, while PSU banks posted comparatively lower growth between 2–14 per cent.
Amid continued pressure on low-cost deposits, banks have increasingly turned to raising funds through certificates of deposit (CDs) in recent quarters. Deposit mobilisation, especially in current account and savings account (CASA) segments, has remained difficult as lower interest rates make these options less appealing compared to other investment avenues.
Among private banks, IDFC First Bank led the growth chart with deposits rising 17.2 per cent to ₹2.43 lakh crore in Q4FY26. Kotak Mahindra Bank followed with a 14.7 per cent increase, while HDFC Bank reported a 14.4 per cent rise, based on provisional figures.
In a note, brokerage firm Motilal Oswal projected that HDFC Bank’s deposit growth is likely to remain around 14 per cent through FY28. It also expects the bank’s credit-deposit ratio to ease to 94 per cent by the end of FY28.
Within the public sector space, Bank of India recorded deposit growth of 14.33 per cent, followed by Bank of Maharashtra at 14 per cent and Central Bank of India at 13.37 per cent. Most banks have released their provisional quarterly performance data, although some, including the country’s largest lender SBI, are yet to do so.
On the lending side, state-owned banks appear to be outperforming their private counterparts, with advances growth ranging between 12–22 per cent, compared to 12–20 per cent growth reported by private sector banks.
Also read: Air India group to impose fuel surcharge
Bank of Maharashtra posted a 22 per cent year-on-year increase in advances to ₹2.92 lakh crore. UCO Bank reported a 20 per cent rise to ₹2.34 lakh crore, while Central Bank of India recorded an 18.9 per cent increase to ₹3.45 lakh crore.
System-wide credit growth stood at 13.8 per cent as of March 15, 2026 (12.8 per cent year-to-date), maintaining strong momentum supported by sufficient liquidity buffers and a consumption-driven recovery following GST reductions.
On profitability, the brokerage expects private sector banks’ pre-provisioning operating profit to grow 9.1 per cent year-on-year and 3.9 per cent quarter-on-quarter. Net profit (PAT) is projected to rise 11.9 per cent YoY and 6.9 per cent QoQ in Q4FY26.
In contrast, PSU banks are estimated to see PAT growth of 2.1 per cent YoY, but a decline of 5.3 per cent sequentially in Q4FY26. This is attributed to yield repricing, limited reduction in funding costs, and modest treasury gains due to rising bond yields, the brokerage noted.
Follow us
