Hello and welcome to Money Control today. We're going to be joined by a very special guest, someone who heads the largest bank of the country, State Bank of India. Thank you so much, Mr. Setty, for joining us. This is also your first interview to Money Control from an SBI chairman in many years. It's very special for us and I hope you also enjoy this. I'll start straight away with my questions, Mr. Setty. With just weeks left to end FY26, what would be your forecast in terms of growth for the bank as a whole, and if I were to split it into retail and corporate, what would be the projections as well?
Thanks, Hamsini, to have me here. The credit growth has been good for SBI. Of course, the system growth probably would moderate to around 11 to 12% is our assessment. SBI probably will have two percentage points more, speaking to our guidance of 14 to 16% credit growth in the current quarter. I mean, 14 to 16% would be the whole year guidance which we have given earlier, and we're sticking to that. And with a lot of measures both in terms of budgetary measures, policy measures, monetary measures, we assume and expect that the credit growth will continue in the same pace next financial year also.
Also, we've seen that over the last couple of years retail growth has outpaced that of corporate. Somewhere we saw corporate also catching up towards mid last calendar year onwards. You expect that trend to continue in our books?
Almost all the segments have grown secularly except the unsecured personal loans. I think on the retail side, predominantly home loans have been growing pretty good. I think in Q3 we achieved 14% growth rate year on year. So the growth rates across the segment including corporate is going to be robust.
Yes, you're right. I think retail loans have been growing faster than the corporate. I think probably we are one of the outliers where the corporate credit growth is also significant for us. In fact last quarter we have grown year on year 14.5% on the corporate book. So we have good visibility on the corporate book side, both on the capital expenditure loans as well as on the capital loans. So we are confident that we have good visibility on the corporate credit side too. And the SME, agriculture, home loans, these are all contributing to what I mentioned: 14 to 16% credit growth rate.
I remember in our earlier interaction, just when you were taking charge, you said MSME is something close to your heart, you will focus a little more on during your tenure. Can you throw a little more light on that and how it's panned out so far for you?
We all know that a lot of credit is unmet, credit demand is still there in the MSME category. Borrowers – there are a lot of players in MSME lending: you have mainstream banks like us, and then you have NBFCs also lending to them. MSMEs also borrow from the unorganized sector, informal sector. But today, the biggest advantage for the banks to assess them is the availability of data. Yes, I do remember that MSME is something which we'll be focusing on. In the last 9 months we rolled out what is called a business rule engine, which is purely data-based and it uses the GST data, income tax data, and our own account data to assess the credit eligibility of an MSME borrower. You would be surprised: today we are able to give in-principle sanction in 15 to 30 minutes. Only the customer has to come in and give his consent to access the GST data and also submit his income tax details. This speed with which we are able to give the approvals for MSME loans, and we also are trying to move from the collateralized lending to a cash flow based lending guaranteed by the CGTMSE. This combination has really worked. In the last 9 months we have done ₹34,000 crore worth of loans using the business rule engine. I believe that this is going to be a big game changer for us. The availability of data has given the confidence to the lenders to look at this lending in a much brighter way. It is not only SBI; the whole system is growing at 17 to 18%. In fact, some of the lenders are growing more than 20%.
Yes, so which means that there's some confidence coming into lending up to sector. Before I go granular on your business, I'd like to understand a little bit of macro from you, sir. Where do you see the growth pockets today? What in your view looks very favorable from a banking perspective, and where would you think that it's time for banks to pull back a little more?
I don't see any reason to pull back from any sector. In fact, every sector has good asset quality today. If you really see, the best, most benign asset quality cycle we are going through right now. So this is the time to put some repose confidence in the system and start looking at lending to these sectors across agriculture, retail, corporate. So I don't think there's any reason to pull back. There were some concerns definitely on the unsecured personal loan and some of the regulatory measures, and also the relooking at the underwriting standards on the unsecured personal loan slowed down. But in our overall lending book, we don't see any sector which needs to be looked back or not to be lent to. Whichever sector is requiring credit today, I think everybody is interested in lending to them. As far as growth concerned, I think the current budget which had a lot of nuanced approach to ensuring that consumption demand is pushed, and credit to MSMEs are available, and agriculture sector is getting the required attention – these elements probably will spur better growth rates and resultantly better credit growth.
Wonderful. I'll move on to deposits. I know I've asked this to you several times in the past. You have one of the healthiest CD ratios in the industry, but yet you're relentlessly on the pedal when it comes to deposit growth. Is that an initiative that will continue at SBI even as we slip into FY26? And you've also come up with very innovative products on the deposits front. All of FY26, will we see more innovation there?
Deposits is a franchise for us. I mentioned the same sentence earlier also that when we have 22,700 branches and growing, and these are the branches primarily to mobilize the savings of the society, there's no way we can say that we don't take the deposits. A lot of investors also ask: when you have such a healthy CD ratio, why are you still acquiring? I think it's important that the depositors who come and trust us and want to keep with us, we do not want to turn them away. And this we have done not only today, even during COVID period when nobody wanted the deposits, when the deposits were flowing to us, we have never turned away our customers. We continue to take the deposits and not only took the deposits, we have adequately compensated the customers. I think this is the great franchise which we built over more than two centuries. I don't think there will be anytime we move away from mobilization of deposits.
Perfect. I do have a few more questions on numbers, but before I get there, it's been about six months, a little over six months right as a chairman of the bank. What would you recall as your best moments in the last six months? Where do you think there's scope to fine tune a little?
Every day is the best moment in SBI. There's no dull moment at all. It's both challenging as well as fulfilling exercise. If I have to sum up what I've been doing in the last six months, we use terms like 'run the bank' and 'change the bank'. The bank is highly system-driven and people-driven, people are highly qualified, so the run part is generally taken care of. We run the branches, ATM network, largest ATM network. But what I've been focusing on and continue to focus – I think even my predecessors focused on it – is change the bank. How do you keep this bank relevant for the changing times? Whether it is in terms of reskilling of the employees and increasing the engagement of the employees, improving the customer service, continued improvement in the customer service, or digitalization – these are some of the things we have been working on. The change part is very close to my heart. I want to make this bank – I and we collectively, not only me, my team is working to ensure that the bank stays relevant to the changing times.
That's a lovely point you're making. Is that how you would want to remember or you would want people to remember, including investors?
I don't think any chairman actually tries to work towards anybody remembering. Because we are lifers in this organization; we have, whatever little we could contribute over the years, we have been contributing. But I think what we are trying to do is in terms of how do we improve the organizational commitment to the society at large and customers in particular, more importantly to ensure operational resilience of this bank because that's very important when you are a systemically important bank and 24% of the market share you have, and 52 crore people trust you. You have to ensure that the resilience is maintained. That is what we are focusing on: maintaining a fourth of India's credit market.
Will that be a continued aspiration of SBI? The reason I'm asking is we do keep hearing of the need to have more equivalence to SBI, whether in the PSU system or in the private banking system. But will you fiercely ensure that one-fourth of credit market remains with SBI?
We have one-fifth of the credit, one-fourth of the deposit market is something we are targeting. I think as the economy grows, there is room for everyone to grow. One thing we always told: any activity what SBI does, we have to be number one. So in that pursuit, we will ensure not only defending of market share; we will make an effort to improve the market share. I don't think there is any change in that attitude of the bank. This is one bank, if you see from 1970 data, barring a few years, we have never lost the market share. Inevitably, we will definitely be focusing on that. I think more than the market share per se, the positioning – what is that improvement in the overall banking and financial services system – is what SBI has always tried for. Whether we have done the AMC business, life business, everywhere we brought value to the ecosystem. I think that is more important to remember.
Absolutely. And you also touched upon very fleetingly in your earlier answer the way P&L is also shaping up. What's interesting especially in the last two years is that you're giving a tough run to private players in terms of your return profile, your ROAs and ROEs. If someone didn't know that SBI is a state-owned bank, they would think that it's at par with any global bank, at par with any Indian private sector bank. Does that leave you with a lot of sense of satisfaction, and from an investor perspective, where do you want to take it forward?
Our satisfaction comes from the fact that we stayed relevant to the changing times. That is important. Yes, we are a listed organization, we need to – one of the most important stakeholders for us apart from the customers is our shareholders, of course, and employees. We always strive to ensure that all the stakeholders are taken care of. As far as profits are concerned, of course we are doing extremely well, and as you mentioned, operating at scale and giving this kind of returns is – we feel satisfied that we have done a good job in terms of ensuring that shareholder value is created. Another important thing is that when you operate at scale, maintaining asset quality best in industry is also something that I think needs to be recognized. I'm sure most of the investors and analysts recognize that we are the gold standard in asset quality, and we make an attempt to ensure that we maintain the asset quality and the return profile through the cycles. That is our effort: even if the cycle turns, we should be able to maintain.
What would your long average on ROA and ROE then be?
