SBI chief sees growing loan book, lower deposit growth not a challenge

Even as the Reserve Bank of India and the Finance Ministry have expressed concerns over declining deposit growth, country’s largest lender State Bank of India said it faced no challenges in this regard,

Chairman Dinesh Khara said on the sidelines of an event held here today., “We are in a position to support our loan book growth well. So, I think so long as we can support the loan book growth well, I don’t think that we do have a challenge.” Earlier this week, Finance Minister Nirmala Sitharaman in a meeting with heads of public sector banks (PSBs) said lenders must focus on deposit mobilisation. Similarly, Reserve Bank of India Governor Shakitkanta Das has also stressed that banks’ credit growth must not run miles ahead of deposit growth.

Khara today said the bank has an investment book of over ₹16 lakh crore, and is unwinding a part of the excess SLR (statutory liquidity ratio) to support the loan growth. SBI’s overall advances rose 15 per cent year-on-year (YoY) to ₹38.12 lakh crore in Q1FY25, whereas total deposits were up 8 per cent YoY at ₹49.01 lakh crore.

• Also read: RBI flags potential risks and challenges in financial sector

Statistical myth

A recent SBI economist report had said that concerns around deposit growth are a “statistical myth” as the overall quantum of incremental deposits has been higher than credit since FY22. Khara explained that the report tried to capture the time series over a period of time and that a similar situation existed even in 2003-04.

Going by the past experience, Khara said there will be a convergence of deposit and credit growth only by June-September 2025.

According to CareEdge Ratings, while banks’ CD ratio has been generally hovering around 80 per cent since September 2023, it saw a decrease of 5 basis points (bps), compared to the previous fortnight, and stood at 79.3 per cent for the fortnight ending July 26, 2024. While a few large lenders are going slow on credit growth to match pace with deposits, a few mid- to small-size banks are hiking deposit rates to mobilise deposits.