Hear SBI Chairman, Shri Challa Sreenivasulu Setty

So one of the things right at the outset I would like to mention on the AI story: I think everybody talking about India missing the AI story — there are no AI companies to invest, so the investor conference cannot not talk about AI adoption in India. But I think I'm a great believer that India would provide the largest use cases and the largest adoption of AI, and going to be the biggest beneficiary in the world. And the microcosm of that is of course the financial services sector. While it's very interesting to see that more than the financial sector today, the great amount of AI — when we are talking about AI, obviously we're not talking about merely conventional ML models, we're talking about GenAI, agentic AI. A large-scale adoption as we speak is happening in the healthcare sector and in the manufacturing sector. So which means that they're all aimed at increasing productivity, and I'm sure that the financial sector, including SBI — we were early adopters of conventional AI. We launched a product called pre-approved personal loan which was a big hit in terms of being completely driven by the ML model. We were also one of the first banks to adopt responsible AI even before the RBI came with AI guidelines. Responsible AI and ethical AI would be a cornerstone of financial services in India. But I personally believe that the AI adoption and the way the technology is adopted in India in the past will be primarily used to achieve efficiency of scale. Just to give an example, if we have 530 million customers, we have on one extreme 170 million customers who are financial inclusion customers who have started their journey with a zero balance in their accounts and 99% of them are savers today, and on the other extreme you have high net worth individuals, ultra-high net worth individuals. So how do you design your products using AI in terms of creating hyper-personalization models is something that is central to the whole technology and AI adoption in the banking sector.

So a lot of capital investment across the globe have led to a great amount of automation. If you see, much of the capital investments — not only India, India is not unique. I think in other countries also, even the developing countries, it is seen that much of the manufacturing is automated. The amount of capital invested and the jobs created always is a disconnect across the globe. But India has uniquely a very strong services sector, and the services sector of course initially will be impacted by AI. But I believe — I was just giving an example — a lot of people said that in the IT jobs, for instance, the coding moving to AI, a lot of people will lose jobs. But in the IT sector, 99% of the workforce are engineers, and these are the people who can be reskilled in a short span of time. And I think we need a large number of skilled manpower to deploy AI itself. I think this is something what we are really facing in the market now — that while AI capital investments, everybody is ready, the availability of the manpower to deploy these AI tools is actually becoming a challenge. So how do you reskill and reorient your people? And time and again, India proved that they are capable of repivoting. We pivoted from a simple BPO to global capability centers today, world-class, and I have not seen anyone shying away from global capability centers setting up here in India. So I think the productivity gains would ensure that there is investment in areas which probably will create more jobs.

So currently, I think both from a regulatory point of view as well as the government point of view, India is not focusing on crypto, but we are seriously focusing on the central bank digital currency, both in the retail segment as well as the wholesale segment. While CBDC definitely requires some kind of repurposing in the sense that in a very matured payment ecosystem, CBDC positioning as a payment mechanism is not going to work. So we are looking at, for example, a programmable CBDC, and for most of the direct benefit transfers where a specific purpose is intended, CBDC can be effectively deployed. So I think the focus seems to be more on the central bank digital currency at this moment than looking at other digital forms of currency.

So in some way, without being part of the ministry anyway, we keep engaging ourselves with the policy-making, at least advisories. So broadly, I think if you have seen over the years, Indian government has been extremely positive towards development of the financial ecosystem. While they have general obligations in terms of maintaining and catering or satisfying all segments of the population, but central to this overall approach has been efficient fiscal management and a very proactive approach. I just would like to share an example. For instance, when this West Asian conflict came up, the first and foremost thing what we suggested to the government was that while it may not be as intense as COVID, but it's equally diversified in terms of its impact on the economy. And we said that the most vulnerable segment could be small and medium enterprises and businesses. So as a very proactive measure, they came with the ECLGS — you're all familiar, this emergency credit line — and as we see, a lot of businesses which are having some disruption in their businesses, they're able to access this liquidity. So broadly, I think the government is more focused on ensuring the stability of the economy, and they have strengthened over the years the banking system. Today the public sector banking system is so robust we are able to support the credit growth which is very significant now.

So the pipeline what we mentioned in our earnings call also — I think a lot of activity on the corporate side in terms of renewables. And interestingly, of course, the conventional power — thermal — is also coming back because of the energy requirements of India. While most of the capacity additions are happening in renewables, the thermal capacities are also coming back. And then we see the data centers, roads, and many other — hydrocarbons is again another great investment which is happening both in the central PSU space as well as in the private space. These are some of the major industrial segments what we are seeing. Despite this West Asian conflict, we have not seen anyone pulling back on the capex. We'll have to see, maybe three, four months or six months later, how the new capex plans will come into force. What was the second part you were asking? Make in India.

I think manufacturing always has been a challenge for us. While PLI has been a very successful program. We have — I think the large success is seen in electronics. Today India is the second-largest iPhone exporter. While people say that we quote only iPhone manufacturing as an example, but it's a good example to give. But we see a lot of interest in setting up electronic manufacturing here, the first phase of PLI supporting semiconductors, EVs. I see a good growth coming in electric vehicles in public transportation. I think this West Asian conflict is also a wakeup call for India in terms of electrifying its public transportation. Very interestingly, if you see, despite whatever has happened in availability of crude, disruption and all — not a single train in India stopped. Fifteen years ago you would have had 50% of your trains stopped because the electrification of the railway system in the last decade has been immense. Not a single train stopped because of non-availability of diesel or anything. So this shows that if at scale we can electrify the public transportation, which I believe is the next frontier of growth which is coming up, I think it's a good story on the manufacturing side.

So India's growth story, I think, is a long-term story. You would be hearing many of the people as you proceed during the day. Our investment horizon for Indian equities or Indian investments have to be long. While we all appreciate your concerns in terms of the market correction, rupee depreciation, and which has probably impacted the earning estimates from these investments — but I'll just give a story: in 2018, State Bank of India made a loss, and that's the first time State Bank of India made a loss. And I was a chief general manager at the bank at the time. The management came together and we met at a conference like this, and the theme of the conference was how do you become a hundred billion dollar market capitalization company. And I think this is the story of the audacity of India — that you are able to think big even when you are going through difficult times. And as the story goes, SBI indeed became 100 billion market capitalization last year. So I think you have to be patient. The story of India, as I mentioned, is the demographic dividend and a lot of effort, and also the entrepreneurship of India is immense. And you have been an example of success — what Indians can achieve across the globe. This gives me confidence that the whole positioning of India as a long-term story is clearly justified.

So I think the banking sector even today also has the same aspiration. And as I mentioned, I think India would have 1.1 billion working population. The biggest contribution a banking sector can do is how do you gainfully employ them, make them self-supportive in terms of providing capital for their growth ambitions. I think this is the biggest story what India can support. And it is not out of context to mention that in the past also we have supported millions of people to come into economic activity and be self-sufficient. I think the biggest story would be in 2047 that what is the contribution banking sector made to see that this 1.1 billion people actually get a gainful earning capacity.

Thank you. Thank you very much.