MC EXCLUSIVE Will acquire 1% more market share annually to hit 25% GDP target, says SBI chief Setty

SBI also had some locked-in capital in Yes Bank getting released.

That’s another highlight of the year. It’s not only about a profitable exit when we had a very difficult entry, but more importantly, we were able to conclude one of the most difficult and different restructuring plan ever attempted in any banking industry. SBI played a very significant role, along with other partners, with the support of regulator and the government of India. It’s also an example of how collaboration and understanding between various entities can save, restructure and make it available to a very big strategic player to come in. It’s a good example we have set — you don't have to have a common playbook of merger. Yes Bank is a great learning.

With so much capital unlocked, how do expect SBI to grow in FY27?

A credit growth of 12- 14 percent and deposit growth of 10-11 percent is what we are expecting, though we are not much worried about deposit growth. We have sufficient liquidity and capital.

With the QIP, Yes Bank part exit, internal accruals and potentially the AMC listing where divestment of 6 percent is happening, it should give us adequate fire power to support credit growth. In fact, even without considering the AMC listing, we can support up to Rs 12.5 lakh crore credit growth.

SBI builds everything at scale but it comes with its own set of risks. Having touched Rs 100 lakh crore on balance sheet, is scale still an advantage for SBI?

Scale has never been a problem and our strength is handling the scale with efficiency. Scale brings complexity, which requires a very qualified manpower.

On the risk and compliance side, I proudly claim that SBI has the largest and the best professionals engaged in risk and compliance across the bank. We have created a complete vertical for risk and compliance management till the regional office level. SBI employs the largest risk and compliance workforce and the oversight is much stronger. Assurance function is one of the strengths of SBI.

On the cost-to-income front, we need to invest in right technology, tools and people while operating at scale. We are trying to bring efficiencies by adopting digitalisation and technology. We have doubled our balance sheet in six and seven years and we probably will double in another six and seven years.

If India’s GDP is projected to be an $8 trillion economy, we would like to be at least %2 trillion. Becoming 25 percent of the GDP is something that we are working on. These are not milestones to look forward to — it's a natural progression.

While SBI is India’s largest bank, it’s not even among the top 20 global banks. Does it bother you?

The size of the bank, both in terms of assets or business, is a function of economy. JP Morgan is 13 percent of the US economy. But despite being 20 percent of the Indian economy, SBI is not a global bank because the Indian economy requires that scale. India's growth story is SBI’s growth story. We believe that as India progresses and we make ourselves 25 percent of the GDP, our ability to be in the global ranking, along with India's rank, would be much better.

For that, you will have to grow faster than India. How do you plan to do this?

We are a dominant player in many micro markets. In many districts, we have market share exceeding 40-50 percent.

If we only defend the market share, we will remain at 20 percent of India’s GDP. Our objective is to acquire market share whether we are at the lowest or the highest end now. We tell our teams that whatever is your market share, you should add 1 percent market share every year. Acquiring the market share from the dominant position should make SBI become 1/4th of the Indian economy, and probably will put us in the global ranking. It means as the economy grows, the market grows.

If we are not acquiring more market in the incremental market share, somebody will be taking the market from us. We will be sitting ducks, which we don’t want happening. We are reimagining this and YONO is one of the enabler to ensure that we reach to even those people who are not banking with SBI.

Our micro strategies are designed by our regional managers, to understand where they lack and how they can gain that market share. While we have overarching philosophy of driving the bank, we leave it to the local leadership and we have seen excellent results in some of the markets.

How do you view foreign banks', including SMBC's, renewed interest in the Indian banking system?

If capital is a constraint and somebody is coming with the capital, it's is a good move. Whoever has come now are very respectable names in their jurisdictions. They are fairly large banks with deep pockets and willingness to invest in India. They are not short-term players. It will bring a new energy into the banking sector.

Watch the SBI chairman CS Setty’s interview here

Do you believe the headwinds of 2025 will be there in 2026 as well?

The stage is set and I hope that the consumption demand sustains. Whether it is tax cut for certain segments of people, GST reforms and on the regulatory side removing the overhangs which have been there for years, many things are being taken care of.

The assurance by the RBI governor that durable liquidity will be ensured is a great comfort for the banking industry. It is helping monetary transmission. The combination of regulatory and fiscal measures have set the stage and I am hopeful that 2026 will be a good year.

Does SBI have the bandwidth to stomach another rate cut?

While we believe 5.25 percent is good (as repo rate), the wider expectation is a terminal rate at 5 percent. So, there could potentially be another rate cut. If growth concerns are not there, repo at 5–5.25 percent should be adequate, given that we have the combination of modest inflation and decent growth rate.

Can the rupee turn out to be the joker in the pack?

The behaviour of rupee is a combination of several factors, not necessarily our domestic economy or domestic compulsions. Exchange rate will get corrected if tariff related uncertainties is removed and there is some improvement in the global uncertainty. This is also pushing the rupee depreciation. I think we should not really worry too much about it.

We've never heard SBI make a pitch for acquisition finance until recently. How are you charting the strategy?

Acquisition financing is not about scale; no one can build their book on acquisition financing. It is opportunistic financing. It's not like doing a home loan and we are mindful of that. But we also have been doing outbound acquisition financing for quite some time and we are working on various mechanisms.

We will be coming out with an approach once the final guidelines are there. We would be setting up a separate unit to look into it. Our merchant banking arm, SBI Capital, will play an important role in providing expertise and supporting the business. I'm definitely open to collaborations, and it depends on the size of the deal.

While SBI has come a long way in terms of valuation, it still trails private peers. Is that a concern for you?

Investors look for consistency. They don't want to see surprises and we have provided a consistent performance. Are we happy with this valuation? Obviously not. But what valuation will satisfy us, we don't have a number. This franchise requires a bit (more) of valuation.

We are also assuring the investors and the larger community of our stakeholders that we want to provide consistent performance in terms of the cost, margin, liability and asset quality management. Scale can bring its own surprises but it also brings an advantage that if swimming in one lane is not working, we will take another lane to swim. We have to please the markets when you are in the market. We have a largest number of stakeholders outside the investor community also and we do best, the valuation conundrum probably will be broken.