Strong consumption, working capital use fuelling corporate credit uptick, says SBI Chief CS Setty

CS Setty also said that the upcoming monetary policy review could be shaped by the interplay between India's robust growth and relatively soft inflation

State Bank of India is seeing strong momentum in credit demand across segments, with healthy corporate loan enquiries adding to overall growth, CS Setty, chairman of the country's largest lender, told Business Standard in an interview.

He said SBI expects credit to expand 12-14 per cent in FY26 after revising its guidance upward earlier this year, supported by steady retail, agriculture and MSME lending, and a notable pick-up in corporate borrowing.

Setty noted to Business Standard that the upcoming monetary policy review could be shaped by the interplay between India's robust growth and relatively soft inflation.

While the rupee's recent weakness and slower deposit mobilisation have raised questions in the market, he stressed that policy rate decisions hinge primarily on growth-inflation dynamics.

The stronger-than-expected GDP print for the September quarter, he said, has shifted expectations towards a pause, even though the inflation trajectory - especially food prices - remains a key variable for the Reserve Bank of India.

On the credit side, Setty told Business Standard that the bank is not seeing any overheating in specific sectors. Retail, agriculture, and MSME portfolios have been expanding at 14-15 per cent for several quarters, while corporate credit is now sustaining double-digit growth.

Improved utilisation of working capital limits by companies, he said, has been one of the biggest drivers of this acceleration, aided by fiscal measures, abundant liquidity and earlier rate cuts that helped support consumption.

He also pointed out to Business Standard that drawdowns from previously sanctioned term loans have increased, signalling stronger project activity.

In addition, early signs of capital-expenditure discussions are visible across several industries. While big steel and cement players continue to rely on their own cash reserves for new investments, sectors such as renewable energy, roads, data centres and refineries are generating demand for fresh term lending.

Setty added that effective liability management would help SBI maintain its net interest margin above 3 per cent, a level the bank aims to protect through the current financial year.