📅 Aug 05, 2026State Bank of India9 MIN10541917 VIEWS13 SEGMENTS · 2 SPEAKERS
Hear our Chairman, Shri Challa Sreenivasulu Setty, share his insights on the RBI’s latest Monetary Policy in an engaging conversation with Ms. Latha Venkatesh, Consulting Editor-@CNBCTV18News
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What Challa Setty said
Written from the verified transcript and checked against it. Every figure links to the moment it was said.
Challa Setty, chairman of State Bank of India, said the Reserve Bank policy was on expected lines and credit growth remains robust, with system numbers through 15 July strong. He argued credit growth and GDP growth are mutually reinforcing, projecting real GDP growth of 6.7-7%, nominal GDP of 12-12.5%, and credit growth of 2-3% above that. He welcomed FCNR(B) inflows as easing liquidity and replacing high-cost bulk deposits, noting NIM impact varies by bank. On MDR for UPI, he said charging merchants on P2M transactions above 2,000 rupees could cover 60-65% of P2M volume and support infrastructure investment. He expects the second half to be better, with rate hike uncertainty removed for the calendar year and improved economic activity.
Key takeaways
Expects credit growth of 2-3% above nominal GDP, with nominal GDP around 12-12.5%.
FCNR(B) inflows will replace high-cost bulk deposits, easing NIM pressure for some banks.
MDR on UPI P2M transactions above 2,000 rupees would be positive and cover 60-65% of such transactions.
Says full year looks positive for banking, with Q2 better than typical.
Welcome back to this monetary policy special. I am now joined by the State Bank of India chairman, Mr. CS Setty. Mr. Setty, thank you very much. It's very important to hear your voice after an important policy. Well, the analysts, the economists and the bond experts were of the view that the Reserve Bank is sounding more dovish than expected. As a banker, what do you make of it? Does it mean continued strong credit growth?
Thank you. First of all, you know, to have me on your show. I've been hearing you know a lot of views on your channel. Obviously the policy decision seems to be on expected lines while the discussion is more in terms of whether it is more dovish or hawkish. Coming to the credit growth, we are seeing a robust credit growth. System numbers announced for 15th July also seems to be the credit growth seems to be continuing in a very strong manner. While we will be announcing our numbers in a couple of days, but we are also seeing a good growth in our credit portfolio, very secure credit growth on that. So it's very heartening to see that GDP also.
So let me make it very clear that I'm going to ask you questions only about the banking sector. I am aware that personally you would be in the silent period but the Reserve Bank has upped the growth forecast for even the quarter gone by to 7%, something I always thought was on the cards and as you must have heard the economists say there is a very good chance that the full year is also 7%. They've anyway upped the full year forecast as well by 10 basis points. So do you think that we are in for even stronger credit growth in the remaining part of the year for the banking sector?
I think the credit growth is also helping in the GDP growth. I think they're mutually reinforcing activities. So obviously if the real GDP growth is anywhere between 6.7 to 7%, the nominal GDP, you know, with the 5% inflation projection in the later half of the year, would be placing the nominal GDP around 12 to 12.5%. So over that, 2 to 3% credit growth is definitely possible. So broadly I believe that the current rate will continue. It may not be significantly different from what we are witnessing today.
We can take 17.7 and 18% with both our hands if it is maintained for the full year. And by the way, sir, nominal GDP, there are even some 13% estimates on the street because the WPI is higher. Let me come to the margin part again for the banking sector. There are two or three positives. The FCNR money is coming in. I don't know whether it is cheaper than local deposits and there is this extra liquidity keeping the cost of capital down even in the market. Do you think all told, the margin position for banks becomes slightly better or no?
No, first of all, I think it would definitely ease the liquidity concerns. While RBI always promised, the governor has always been vocal that sufficient liquidity will be available in the system, but primarily the banks would like to have the liquidity coming from their deposit growth and that has been enhanced now with these FCNRB flows. That's first positive and definitely a very important positive. And what we have seen in the system, and even including SBI, that part of this FCNRB is going towards replacing the high cost, you know, bulk deposits. Essentially while the other retail deposit growth rate is a franchise activity, the bulk deposits are essentially treasury activity. So that will be reduced, which means that the NIM impact will be different for different banks. The banks which have been resorting to high cost deposits in a significant manner probably will get benefited more, and other banks which have not been resorting to that, D-I deposits or differential interest rate deposit, probably may not be really different in terms of the margins. But overall if you ask me, the assessment is an extremely positive one.
7 more exchanges in this transcript
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Setty, C. (2026, August 5). Hear our Chairman, Shri Challa Sreenivasulu Setty [Interview transcript]. State Bank of India. CEOInterviews.AI. https://ceointerviews.ai/interview/1162811/
MLA
Challa Setty. "Hear our Chairman, Shri Challa Sreenivasulu Setty." State Bank of India, 5 Aug. 2026. Transcript, CEOInterviews.AI, https://ceointerviews.ai/interview/1162811/.
BibTeX
@misc{setty2026_1162811,
author = {Challa Setty},
title = {Hear our Chairman, Shri Challa Sreenivasulu Setty},
howpublished = {Interview transcript, State Bank of India. CEOInterviews.AI},
year = {2026},
month = {aug},
url = {https://ceointerviews.ai/interview/1162811/},
note = {Speaker-attributed transcript with timestamps}
}
