SBI Navigates Deposit and Loan Growth Challenges

SBI Chairman Dinesh Khara addressed concerns about deposit and loan growth disparities, emphasizing that India's largest lender can manage current trends. The bank is reallocating resources from excess government securities investments to meet loan demand. Despite a prolonged gap in deposit growth, Khara remains confident in supporting loan growth effectively.

SBI Chairman Dinesh Khara on Friday addressed concerns surrounding the continuing gap between deposit and loan growth, asserting that the country's largest lender is well-positioned to manage the challenges. Speaking to reporters, Khara highlighted the bank's strategy of unwinding part of its excess investments in government securities to support loan growth.

For nearly two years, the banking system has experienced deposit growth trailing behind credit expansion, and SBI has not been an exception. Experts attribute this trend to savings flowing into higher-yielding capital market alternatives. While some view this as a statistical anomaly, SBI researchers argue that overall incremental deposits have outpaced advances since FY22.

Khara, who is set to retire later this month, reassured that SBI's strategy focuses on resource mobilization with minimal reliance on interest rates. He emphasized the bank's ability to maintain higher returns on lending compared to investment yields. Addressing chartered accountants, Khara also suggested that India's audit and accounts expertise could enhance export revenues, drawing parallels to global capability centers in the IT sector.

(With inputs from agencies.)