New Delhi, Aug. 21 -- Public Sector Banks (PSBs) could face pressure on their margins due to their greater reliance on borrowings to support credit growth, even as private sector banks (PVBs) are expected to continue narrowing the loan growth gap with their public sector counterparts, according to a report by Bernstein.

The report expects the banking sector to maintain healthy growth in FY27, supported by strong liquidity conditions and a recovery in nominal credit growth. However, a possible tightening of policy later in the year could moderate the pace of growth.

It stated, "Within the sector, PVBs are likely to continue narrowing the growth gap with PSBs, while the latter's greater reliance on borrowings could weigh on relative margi...