Setty remarked that retail loan growth is set to substantially strengthen, bolstered by improved borrower profiles along with the effects of the rate cut and recent tax relief measures. “It’s a no-brainer to expect retail growth to be more robust than what we have seen in the last few months,” he stated. Concerning corporate credit, Setty mentioned that the conditions are favorable with adequate liquidity and moderate interest rates, although actual growth will depend on whether companies opt to revive their investment strategies.
However, margins are anticipated to follow a U-shaped trend in the upcoming year. Setty elaborated that margins might decline sharply in the short term due to a lag in the repricing of deposit rates but should see improvement by Q4FY26, supported by the recent reduction in the Cash Reserve Ratio (CRR) and abundant liquidity. “Incremental deposit rates are being adjusted more quickly. The concern lies only with the existing stock, which will take about six to nine months to reprice meaningfully,” he noted.
In terms of unsecured loans, Setty mentioned that stress levels have diminished across the industry and SBI’s portfolio is in a stronger position. He expressed optimism that growth in unsecured personal loans will rebound, driven by declining interest rates and increasing consumption. “We’ve almost reached the low point in growth rates for that segment, and it’s only going to go up from here,” he asserted.
Setty also praised the RBI’s CRR cut, calling it a positive surprise that will enhance liquidity and create a money multiplier effect. “For a long time, we’ve been urging the RBI to reassess the CRR… This is very positive, in my view,” he concluded.
Watch accompanying video for entire conversation.
