Politics · India Bureau
SBI chief flags three-month pause on deposit rate increases
State Bank of India Chairman C S Setty has signalled that deposit rates are unlikely to rise for at least three months, citing abundant system liquidity following the RBI's recent policy decision. However, he cautioned that sustained elevated credit growth could force banks to revisit deposit rates.
LSN India ·
SBI Chairman C S Setty said Thursday that India's largest bank does not anticipate hiking deposit rates over the next two to three months, given the excess liquidity currently circulating in the banking system. His comments came a day after the Reserve Bank of India announced its latest monetary policy decision.
Setty indicated that the central bank's shift towards a tightening cycle should enable banks to expand their net interest margins—a key profitability metric—for up to three quarters. "We have sufficient liquidity in the system, so there may not be any rate action on deposits over the next two-three months," he told reporters.
The SBI chief acknowledged, however, that if credit growth continues at its present elevated pace, banks may be compelled to raise deposit rates to fund increasing loan advances. He also recognised that depositors require compensation through positive real interest rates, particularly as inflationary pressures persist.
On SBI's own lending trajectory, Setty said the bank aims to sustain credit expansion at 14-15 per cent annually. The bank's strategy reflects confidence in the economy's growth potential while balancing the need to maintain adequate deposit mobilisation.