Positive impactResults
Are PSU banks becoming more disciplined in corporate lending? Bank of Baroda's strategy points to a shift
Economic Times 3 hrs ago·28 Jul 2026, 6:33 am
Bank of Baroda's recent performance suggests a strategic pivot in the banking sector. The lender has reported healthy credit growth, but this momentum is being driven primarily by the retail segment rather than corporate lending. To achieve this, the bank has deliberately moderated its exposure to corporate loans, specifically targeting low-yield, non-MCLR-linked projects. This move signals a broader trend among public sector banks to prioritise stability and quality over aggressive expansion in the corporate space.
For investors, this shift indicates a move towards more disciplined lending practices. By focusing on retail and high-quality assets, banks aim to improve their risk profiles and asset quality. This strategy helps in managing non-performing assets and ensures a more stable earnings stream. It reflects a maturing approach to credit risk management, which is crucial for long-term profitability and sustainability in a fluctuating economic environment.
Moving forward, investors should monitor the quality of these new retail loans and the bank's ability to maintain credit discipline. The success of this strategy will depend on the bank's execution in managing its loan book. Additionally, keeping an eye on the overall credit growth trends across the PSU banking sector will provide further insights into whether this shift towards retail and disciplined lending is becoming a widespread standard.
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