SBI to Focus on Housing, Corporate and MSME Lending to Align With India's Growth Ambitions: Chairman Setty

New Delhi, Oct 26 (KNN) State Bank of India (SBI) plans to align its growth strategy with India's economic ambitions, focusing on housing, corporate and micro, small and medium enterprise (MSME) lending, Chairman CS Setty said at the Business Standard BFSI Insight Summit 2026.

Speaking at a fireside chat with Business Standard's Manojit Saha, Setty noted that SBI had a wider responsibility as it mobilises nearly one-fourth of India's household savings.

He highlighted that rising interest rates could moderate credit demand in rate-sensitive sectors, particularly discretionary spending, but borrowing for productive activities was expected to remain strong.

“We are entering a rate hike cycle in a robust growth rate,” Setty said, adding that the repo rate could rise by 50 basis points in December, Business Standard reported.

Banks should not be concerned about excessive lending, as available liquidity could be absorbed over the next two to three quarters, he noted.

Deposit Composition and Retail Asset Quality

“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,” Setty said. 

The change was also occurring within banks, as customers increasingly moved funds from savings accounts to fixed deposits.

On retail loan asset quality, he noted that rising interest rates could put pressure on highly leveraged households, particularly borrowers with external benchmark-linked loans, but were unlikely to create system-wide concerns.

“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,” Setty 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.

UPI Costs and Digital Expansion

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

He called for stronger merchant service-level agreements, grievance redressal mechanisms and transaction-level monitoring to prevent merchants from passing MDR costs to consumers.

Setty also stressed the need to reduce customer servicing costs through digital platforms, adding that a branch visit costs SBI around Rs 40-50 per service, compared with less than Re 1 through digital channels.

SBI's YONO app has crossed 110 million registered users, with 200 million seen as an achievable target. The bank is also considering a financial inclusion-focused version, YONO Bharat.

“If we can bring YONO Bharat, we can bring 300 million customers by 2030,” Setty said, adding that the aim was to expand the app beyond mobile banking.

Calibrated Approach to AI

On generative and agentic artificial intelligence (AI), he said SBI would adopt a calibrated approach, focusing on employee productivity and smoother customer journeys.

Setty also identified fraud risk management and transaction monitoring as areas where AI could help the bank detect and manage risks more effectively.

(KNN Bureau)