Speaking at the World Economic Forum in Davos, State Bank of India (SBI) Chairman Challa Sreenivasulu Setty said the country's largest lender is focused on bringing artificial intelligence (AI) adoption at scale to transform customer experience and improve employee productivity, even as banks prepare for moderating margins and structurally lower deposit growth.
In a conversation with NDTV Profit's Managing Editor Tamanna Inamdar, Setty said his discussions at Davos have centred on how large institutions such as SBI can move beyond pilots and proof-of-concepts to enterprise-wide AI adoption.
“For the last three to four versions of Davos, we have been talking about AI. A lot of proof of concepts have happened, but we have not seen adoption at scale in the BFSI space. My focus is to understand how we bring AI adoption at scale in an organisation as large as SBI, with a 530-million customer base,” he said.
Setty noted that SBI has already been an early adopter of AI in customer service, lending and fraud risk management, particularly in transaction monitoring and cyber fraud prevention. Going ahead, the bank sees significant scope for GenAI and agentic AI, especially in hyper-personalisation.
“Today customers receive a lot of unwanted calls. AI can ensure that only relevant communication reaches the customer, at the right time. If everyone adopts this model, customers will thank you,” he said.
Rural Consumption Outpaces Urban
On the domestic macro environment, Setty said rural consumption is recovering faster than urban demand, based on recently released data. He added that consumption growth has been more visible in discretionary segments such as automobiles and white goods.
“Discretionary spending has shown a significant uptick, particularly in autos and white goods. Urban consumption is yet to show a broad-based recovery,” he said, adding that GST rationalisation could help boost consumption among lower middle-income households.
While refraining from commenting on SBI's Q3 numbers due to the silent period, Setty said consumption demand has supported growth in certain consumer loan segments.
Deposit Growth Reflects Structural Shift
Addressing concerns around deposit growth, Setty said the trend reflects a structural shift in household savings rather than a temporary issue.
“Earlier, bank deposits were the primary destination for savings. Today, money is getting distributed across mutual funds, insurance and pension products. This movement away from deposits towards other financial instruments is largely irreversible,” he said.
As a result, Setty said banks will need to diversify their funding sources, including greater reliance on market instruments such as certificates of deposit and bonds.
“Banks cannot build balance sheets only on deposits. Globally, this is already the case. In our New York office, 75–80% of the balance sheet is built on market borrowings,” he noted.
Margins Seen Moderating
On net interest margins, Setty said margins will vary across banks depending on asset mix, liability structure and risk appetite, but acknowledged that margins are likely to moderate going forward.
“Loans are getting repriced faster, while deposits take longer. That creates margin pressure. However, better liability management should allow most banks to maintain reasonable margins,” he said.
SBIMF Listing, Budget In Focus
Commenting on the upcoming SBI Mutual Fund listing, Setty said investor interest remains strong.
“We are the largest AMC in the country. We have created value not just for investors but for the mutual fund ecosystem as a whole. I believe it's a good stock to invest in,” he said.
Ahead of the Union Budget, Setty said markets will focus on the government's commitment to fiscal consolidation, particularly amid global geopolitical uncertainty.
“Despite global challenges, the resilience of the Indian economy has been admirable. We expect the government to stay the course on fiscal management. On taxation, the government has already been liberal over the past year, so expectations are limited,” he said.
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