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According to Motilal Oswal Financial Services Ltd (MOFSL), public sector banks (PSBs) experienced a decline of approximately 20% in their credit market share between FY11 and FY21. However, from FY21 to FY25, the loss in market share has been relatively modest, amounting to only around 400 basis points as they also started participating in growth opportunities and began deploying the excess liquidity on the balance sheets. The recovery in asset quality, healthy capitalization levels, and profitability alongside healthy systemic growth have likely contributed to this trend.

Conversely, private sector banks have successfully doubled their market share from 21% in FY14 to 43% in FY25, driven by their focus on higher-margin retail loans, digital banking, and superior customer service, allowing them to capture a dominating share of the incremental credit market.

On other hand NBFCs, while still playing an important role, particularly in smaller markets, have experienced a slight reduction in credit market share due to increased competition and regulatory challenges. However, adjusted for the merger of HDFC Ltd with HDFC Bank, the market share loss for NBFC stands at negligible levels.

According to MOFSL report, PSBs have shown a sharp earnings surge with aggregate earnings hitting INR1.7t in FY25E. While, Private Bank’s earnings have jumped ~10x from the lows of INR.191t in FY20 to INR1.84t in FY25E. Overall, banking sector's net worth has posted a 16% CAGR over the past 20 years to reach INR29t with sharp rise since FY20 (INR14t) as sector profitability surged

Though, the report highlights that, comparatively, the deposit market share of PSBs has reduced by 14% over FY11 21; the segment lost another 5% deposit share over FY21-FY25YTD as the focus remains on liquidity deployment

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