Mumbai: Private sector banks reported stronger deposit growth in the January-March quarter compared with their public sector peers, even as the broader banking system continued to face persistent challenges in mobilising deposits.
Data compiled by PTI from banks' provisional numbers disclosures showed that private sector lenders recorded deposit growth in the range of 12-17 per cent in Q4FY26, compared with 2-14 per cent growth among PSU banks.
Banks have increasingly relied on mobilising funds through certificates of deposit (CDs) in recent quarters amid sustained pressure on low-cost deposits.
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Deposit mobilisation has remained challenging, particularly on the current account and savings account (CASA) front, as relatively lower interest rates have made such deposits less attractive compared with other financial instruments.
Among private lenders, IDFC First Bank reported the highest growth, with deposits rising 17.2 per cent to Rs 2.43 lakh crore in Q4FY26, followed by Kotak Mahindra Bank with 14.7 per cent growth and HDFC Bank with 14.4 per cent growth, according to provisional data.
In a note, domestic brokerage Motilal Oswal said HDFC Bank's deposit growth will continue to be at 14 per cent till FY28, and the credit deposit ratio is likely to moderate to 94 per cent by end of FY28.
In the public sector banking space, Bank of India reported 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.
A majority of the banks have shared the provisional performance data after the end of the quarter, but some like the country's largest lender SBI have not.
On the lending front, state-owned banks are performing relatively better than their private sector peers, reporting advances growth in the range of 12-22 per cent, compared with 12-20 per cent growth recorded by private lenders.
Bank of Maharashtra reported an advances growth of 22 per cent year-on-year to Rs 2.92 lakh crore. Further, UCO Bank reported an advances growth of 20 per cent to Rs 2.34 lakh crore, and Central Bank of India reporting a growth of 18.90 per cent to Rs 3.45 lakh crore.
Systemic credit growth stood at 13.8 per cent as of March 15, 2026 (12.8 per cent year-to-date), with momentum remaining robust, supported by adequate liquidity buffers and a consumption-led recovery following GST cuts, Motilal Oswal said in a report.
Also Read: Private banks lead small business lending; PSBs lost share in last 2 years: Report
On the profitability front, the report said that private sector lenders pre-provisioning operating profit to grow by 9.1 per cent year-on-year and 3.9 per cent quarter-on-quarter, and PAT to grow by 11.9 per cent YoY and 6.9 per cent QoQ in 4QFY26.
PSU banks' PAT to grow by 2.1 per cent YoY (down 5.3 per cent QoQ) in 4QFY26E, amid repricing on yields, limited reduction in cost of funds, and modest treasury gains due to a rise in bond yields, brokerage firm said.
Data compiled by PTI from banks' provisional numbers disclosures showed that private sector lenders recorded deposit growth in the range of 12-17 per cent in Q4FY26, compared with 2-14 per cent growth among PSU banks.
Banks have increasingly relied on mobilising funds through certificates of deposit (CDs) in recent quarters amid sustained pressure on low-cost deposits.
Also Read: Private banks’ dividend headroom to surge under RBI proposal; actual payouts unlikely to rise: Icra
Deposit mobilisation has remained challenging, particularly on the current account and savings account (CASA) front, as relatively lower interest rates have made such deposits less attractive compared with other financial instruments.
Among private lenders, IDFC First Bank reported the highest growth, with deposits rising 17.2 per cent to Rs 2.43 lakh crore in Q4FY26, followed by Kotak Mahindra Bank with 14.7 per cent growth and HDFC Bank with 14.4 per cent growth, according to provisional data.
In a note, domestic brokerage Motilal Oswal said HDFC Bank's deposit growth will continue to be at 14 per cent till FY28, and the credit deposit ratio is likely to moderate to 94 per cent by end of FY28.
In the public sector banking space, Bank of India reported 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.
A majority of the banks have shared the provisional performance data after the end of the quarter, but some like the country's largest lender SBI have not.
On the lending front, state-owned banks are performing relatively better than their private sector peers, reporting advances growth in the range of 12-22 per cent, compared with 12-20 per cent growth recorded by private lenders.
Bank of Maharashtra reported an advances growth of 22 per cent year-on-year to Rs 2.92 lakh crore. Further, UCO Bank reported an advances growth of 20 per cent to Rs 2.34 lakh crore, and Central Bank of India reporting a growth of 18.90 per cent to Rs 3.45 lakh crore.
Systemic credit growth stood at 13.8 per cent as of March 15, 2026 (12.8 per cent year-to-date), with momentum remaining robust, supported by adequate liquidity buffers and a consumption-led recovery following GST cuts, Motilal Oswal said in a report.
Also Read: Private banks lead small business lending; PSBs lost share in last 2 years: Report
On the profitability front, the report said that private sector lenders pre-provisioning operating profit to grow by 9.1 per cent year-on-year and 3.9 per cent quarter-on-quarter, and PAT to grow by 11.9 per cent YoY and 6.9 per cent QoQ in 4QFY26.
PSU banks' PAT to grow by 2.1 per cent YoY (down 5.3 per cent QoQ) in 4QFY26E, amid repricing on yields, limited reduction in cost of funds, and modest treasury gains due to a rise in bond yields, brokerage firm said.
