SBI won’t get into a rate war amid fight for deposits, says new chief

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New SBI chairman Setty has his task cut out The banking sector is facing the worst deposit crunch in 20 years as the pace or raising funds from customers has lagged credit growth. On year, credit growth was up 13.5% as of 9 August while deposits have risen 10.9%, as per Reserve Bank of India (RBI) data. The credit-to-deposit ratio—or the percentage of deposits given out as loans—has been generally hovering around 80% since September.

It saw a decline of 19 basis points over the previous fortnight to 79.1% in the two weeks through 26 July, compared with 77.3% on 11 August 2023, CareEdge said in a note earlier this week. A basis point is one-hundredth of a percentage point. SBI has a very comfortable credit-to-deposit ratio and is not “under pressure to bring down" this number, said Setty, pegging credit growth for FY25 at 14 -16% and deposit growth at 8-10%.

In absolute terms, this deposit growth will be higher than credit growth given the existing large base, he said. On the lending side, corporate credit growth has been reasonably good, with the bank seeing 15 -16% growth in the previous quarter. “We have sanctioned, approved, and disbursed loans of about ₹4 trillion.

If this is an indication of capital expenditure, then it is a robust one," he said, adding that especially in core sectors such as renewables and roads people have started talking about expansion. “I am sure the private capex cycle will come back." SBI reviewing its technological infrastructure to offer an omnichannel experience to customers under YONO 2.0, the second generation of the bank’s mobile banking application. “We are focusing more on technology and technological resilience, which requires you to invest in data architecture, revisit your