- SBI plans to raise up to $10 billion via FCNR-B deposits by September, having raised $6 billion so far
- Deposits are primarily mobilised through SBI's GIFT City operations under RBI's supportive measures
- Loan and deposit rates expected to remain stable with no repo rate hikes in next two to three quarters
State Bank of India has visibility to raise up to $10 billion through foreign currency non-resident deposits by September, with the country's largest lender having already mobilised around $6 billion under the scheme, according to Chairperson CS Setty.
The bank expects to raise another $4 billion through the FCNR-B deposits and sees no reason at present for either an extension of the scheme or a cap on mobilisation. SBI is primarily raising these deposits through its GIFT City operations, Setty said in an exclusive interaction with NDTV Profit.
The Reserve Bank of India had introduced measures to encourage banks to mobilise FCNR-B deposits, including bearing the hedging cost for eligible deposits raised for three to five years.
On interest rates, Setty said loan and deposit rates are expected to remain largely range-bound, with the bank not seeing a repo rate hike over the next two to three quarters. Liquidity conditions are also expected to remain supported by FCNR-B deposit inflows and steps taken by the RBI. Overall, the bank expects its net interest margin to rise to 3% in FY27 from 2.86% in Q1.
On credit growth, Setty said SBI expects advances to grow in line with the nominal gross-domestic-product growth, which the bank estimates at around 12% in FY27. SBI typically grows 2-3 percentage points faster than nominal GDP, he said.
Credit growth has remained secular across products in the first two quarters of the financial year, Setty said, indicating continued momentum across the lender's loan portfolio.
On the implementation of expected credit loss norms, Setty said SBI is still working on its models and expects to complete testing of all models on its technology platform this month.
On capital raising, SBI may tap the market with one more tranche of additional tier-1 (AT-1) bonds. The bank will look to replace Rs 6,000-8,000 crore of five-year AT-1 bonds that are maturing.
Raising tier-2 bonds is currently unviable amid elevated yields, Setty said. The bank could consider a tier-2 bond issue towards the end of 2026 if yields soften.
On the government's proposed high-powered banking committee, Setty said the banking sector would need to wait for the terms of reference before identifying its key priorities. The government has sought feedback from industry participants on issues that should be examined by the committee.
Setty also said he was not aware of any proposal for SBI to absorb other public sector banks.
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