In a significant milestone, the State Bank of India (SBI) has seen its mortgage loan book surge past the Rs 9 lakh crore mark in November. This robust growth is part of a broader trend, with the bank's Chairman, C S Setty, announcing an upward revision in the full-year credit growth target.
RAM Segments Fuel Optimistic Outlook
SBI has increased its credit growth guidance for the current financial year (FY26) from 12 per cent to 14 per cent. This bullish revision is primarily driven by strong performance in the Retail, Agriculture, and MSME (RAM) segments, which together constitute about 67 per cent of the bank's total loan book. The RAM portfolio itself had already crossed the Rs 25 lakh crore threshold in September.
Chairman Setty highlighted the segment-wise momentum, noting that MSME loans are expanding at an impressive 17-18 per cent, while agriculture and retail are growing at approximately 14 per cent. Within retail, gold loans are seeing healthy expansion, and the bank's express credit (unsecured personal loans) segment is also projected to achieve double-digit growth.
Corporate Credit Revival and Impact of Rate Cut
After a period of sluggishness, corporate credit is showing signs of a comeback, recording a growth of 7.1 per cent in the second quarter of FY26. Setty indicated that the bank expects corporate credit to grow in the lower double digits, contributing to the overall achievable target of 12-14 per cent.
This optimistic forecast is further supported by the recent monetary policy decision. The Reserve Bank of India's (RBI) move to cut the repo rate by 25 basis points to 5.25 per cent last week, after a six-month pause, is expected to make borrowing cheaper. This rate reduction, announced against the backdrop of an 8.2 per cent GDP growth in the July-September quarter, should stimulate demand for fresh loans across sectors.
Strong Capital Position and Future Plans
Despite the potential pressure on margins from the rate cut, SBI remains confident of maintaining its net interest margin (NIM) guidance of around 3 per cent. More importantly, the bank's capital position appears robust enough to fund its growth ambitions without immediate need for fresh equity.
Setty stated that SBI may not require additional equity capital to fund its growth for the next five to six years. The bank's strategy is to maintain a Capital to Risk-Weighted Assets Ratio (CRAR) at 15 per cent and Common Equity Tier 1 (CET 1) at 12 per cent. With current profitability levels, such capital buffers would enable SBI to fund advances exceeding Rs 12 lakh crore, securing its growth trajectory well into the future.
