India, Aug. 29 -- Even though PSU banks' loan-to-deposit ratio increased to 81% from 77% a year earlier, PSU banks' borrowings increased by nearly 29% year over year in the June 2026 quarter, compared to roughly 3% growth at private banks.

Historically, state-owned banks' primary funding advantage over private lenders has been deposits, which enable them to expand loans without significantly depending on market borrowings. As private banks surpass PSU banks in deposit mobilisation, that advantage is now waning, and PSU banks must rely more on borrowed money to maintain credit growth.

PSU Banks Are Borrowing More To Fund Growth Because deposits are not keeping up with the growth of credit, state-owned banks are increasingly using borrowi...