Devina Mehra Explains Why The PSU Banking Sector May Be Entering A Strong Cycle

Devina Mehra, Co-Founder & CMD of First Global, explains the notable shift occurring in India’s banking sector, where PSU banks are now reporting higher credit growth than private banks - a rare trend in the last two decades. She highlights that beyond growth, credit quality in PSU banks has also significantly improved, reflecting the benefits of years of cleanup and restructuring. Mehra emphasizes that the perception gap regarding management competence in PSU institutions has long been overstated. Additionally, recent RBI policy changes, despite unchanged rates, have loosened banking rules in ways that could support business expansion. Her firm currently maintains an overweight position in PSU banks, signaling confidence in the durability of this turnaround.