Private sector banks are facing a double whammy — a noticeable slowdown in loan demand and a wave of job cuts in the IT industry, which together are impacting their financial outlook.
EPS estimates for FY26 have been slashed by 8–12% for several private banks, primarily due to concerns around the salaried class they heavily rely on.
Although recent earnings calls from banks hinted at optimism, expecting a recovery in loan demand by September, there’s growing unease stemming from the continued layoffs in the IT sector.
Salaried IT Employees: A Key Segment Under Pressure
For many private banks, salaried IT professionals make up 10–16% of their retail customer base, especially those in middle and senior management roles who are key borrowers.
A slowdown in this segment directly affects home loans, personal loans, and credit card repayments.
This tight link between banks and white-collar professionals means that job insecurity in tech could spill over into loan defaults or reduced borrowing appetite, pressuring banks’ retail portfolios.
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TCS Job Cuts Send a Warning Signal
The recent move by Tata Consultancy Services (TCS) — India’s IT giant — to cut 2% of its workforce has raised alarm bells.
TCS’s downsizing, even if modest, is symbolic. It suggests a broader sectoral shift that could ripple across other tech firms, further denting financial confidence.
For the banking sector, such developments threaten to reverse earlier hopes of revival, especially when one of the biggest private employers hits the brakes on hiring and workforce expansion.
Banks Hopeful, But Risks Are Real
Despite these warning signs, banks have not entirely lost confidence. Their recent commentaries reflect hopes of improved demand from Q2 FY26 onwards. But these hopes are now being tested by real-world uncertainties in employment and income stability.If job losses in IT continue, the retail lending engine — a core strength of private banks — could face prolonged pressure.
