SBI wants to align growth plans with India's economic ambitions: CS Setty

At the Business Standard BFSI Insight Summit 2026, SBI Chairman CS Setty said the bank will focus on housing loans, corporate lending and MSME growth to support India's economic goals

State Bank of India (SBI) wants to align its growth plans with India's broader economic ambitions, focusing on housing loans, corporate lending and financing for micro, small and medium enterprises (MSMEs), Chairman CS Setty said at the Business Standard BFSI Insight Summit 2026.

 

Speaking to Business Standard's Manojit Saha in a fireside chat, Setty said, "I strongly believe what SBI plans to do as an institution is no different from what India wants to do on the macro side."

 

"We have a greater responsibility to do that because almost one-fourth of household savings are mobilised by the SBI," he added.

 

SBI wants to play an important role in creating economic value through housing loans, corporate lending and support for MSME growth, Setty said.

 

 

Interest rates to influence credit demand

 

Setty said interest rates would influence the composition and volume of credit demand, though the impact might not be immediate. Borrowing by rate-sensitive sectors, particularly for discretionary spending, could moderate as interest rates rise.

 

"We are entering a rate hike cycle in a robust growth rate," he said, adding that demand for credit for productive activities would remain strong.

 

Asked whether an upward rate cycle could help banks mobilise deposits, particularly when stock markets were not performing well, Setty pointed to a structural shift in household savings. 

 

"There is a structural shift in household savings. We are seeing that without realising what asset allocation means, most households are allocating money on savings. So, deposits will continue to remain an important part in this asset allocation," he said.

 

The shift is not limited to money moving from bank deposits to other financial instruments. It is also taking place within banks, he said, as customers can now move funds more easily from savings accounts to fixed deposits. This is changing the composition of deposits on banks' books.

 

"Ease of doing business is also moving the structural composition" of deposits, he said.

 

On the current rate hike cycle, Setty said, "We may have a 50bps hike in December this year."

 

He also said banks should not be worried about excessive lending, adding that the available liquidity could be absorbed over two to three quarters.

 

Higher rates may strain some households

 

On concerns about retail loan asset quality as interest rates rise, Setty said there were unlikely to be system-wide concerns, although highly leveraged households could face pressure. He was responding to a question on external benchmark-linked rates (EBLR) and the impact of rate increases on borrowers, particularly home loan customers whose equated monthly instalments (EMIs) could rise sharply.

 

"So, system-level concerns will not be there, but there would be concern in terms of individuals and households who are at higher leverage now, and I don't know how much they can actually take absorption of hike in interest rates," he said.

 

"Broadly, from a system-level perspective, I don't think we should be really worried about the asset quality on the retail fund," he added.

 

MDR needed to support UPI ecosystem

 

On the debate over the merchant discount rate (MDR) for select Unified Payments Interface (UPI) transactions, Setty said sustaining the payments system required significant investment considering the rising transaction volumes.

 

He further said that the industry needed to examine service-level agreements with merchants and strengthen grievance redressal mechanisms in cases where merchants attempted to pass MDR costs on to consumers. It also needed systems for more granular, transaction-level monitoring. 

 

SBI targets wider digital banking access through YONO

 

Setty said reducing the cost of serving customers was important to keeping services efficient and affordable. Otherwise, services could become inefficient or some costs might have to be passed on to customers.

 

He cited SBI's digital banking application, YONO, as a way to reduce service costs and reach more people at a lower cost. A customer visit to a branch for a service costs about ₹40-50, while the cost on a digital platform is less than ₹1, he said.

 

SBI has crossed 110 million registered YONO users and sees 200 million customers as an achievable target, Setty said. The bank also wants to make the application more inclusive.

 

"We are looking at whether we can have a variant called YONO Bharat, which we will be focusing on financial inclusion customers," he said.

 

"If we can bring YONO Bharat, we can bring 300 million customers by 2030," he said, adding that the aim was to make the application more than just a mobile banking platform.

 

SBI to take calibrated approach to AI

 

On generative AI and agentic AI, Setty said SBI wanted to take a calibrated approach to deployment. The focus would be on improving employee productivity and making customer journeys more seamless.

 

He said AI also had significant potential in fraud risk management and transaction monitoring, areas where the technology could help the bank identify and manage risks more effectively.