SBI Chairman CS Setty Highlights Irreversible Shift In Banking Patterns And Capital Needs For Viksit Bharat

Recapitalisation and reforms in the last few years have really worked well for the public sector banks and balance sheets are cleaner now. The saving behaviour has also changed as depositors are practising asset allocation across segments, according to State Bank of India Chairman CS Setty.

At the NDTV Profit Conclave, Setty highlighted the critical role of capital in achieving the vision of a developed India and the need for diversified sources of debt capital beyond traditional bank loans.

When asked about the changing perception of public sector banks, Setty remarked: "The trust element was always there, PSU banks always carried the great amount of trust of depositors."

"What has changed in the last few years is that… recognition, recapitalisation, reforms, which have really worked well for the public sector bank, balance sheets are cleaner, most importantly, from the last cycle we have learned our lesson in terms of how to use the great amount of data which is available now to underwrite the loans," he said.

He added that PSU banks, traditionally wholesale lenders, have now adopted a balanced mix of retail, agriculture, MSME and corporate loans, resulting in more balanced loan books.

Setty said one of the critical elements for the blueprint of Viksit Bharat to work is capital. "Today, much of the debt capital comes from bank loans. The nature of saving is undergoing a change, there is a shift in depositors' behaviour, asset allocation is adopted across segments of savers," he said.

Setty emphasised the need for deepening the bond market and leveraging capital from mutual funds, insurance and pension funds to achieve the goal of a $35 trillion economy by 2047. "The banks' loans alone will not be sufficient, the debt capital also comes from this segment. Going forward, we will have to see more depth in the market," he said.

Setty pointed out the irreversible shift in savings patterns, driven by the ease of transactions and the inevitability of money flowing into the market. "Within the bank also, we see that the ease of doing transactions has contributed to significant term deposits… Now in two–three clicks, people can start a FD, but still, money going into the market is inevitable."

Addressing the issue of private sector capital expenditure, Setty observed that private capital expenditure is happening, particularly in sectors like renewables, data centres, and roads. "From where I see the private capital expenditure is happening, maybe we are an outlier, we are the largest player in project financing, so if you see our pipeline, then we have both in terms of capital expenditure by public and private both.”

He noted that core sectors like steel are waiting for tariff outcomes but expressed optimism about other sectors' continued growth.