State Bank of India (SBI) Chairman Dinesh Khara remains confident about the bank's position despite concerns over slowing deposit growth, stating that that the lender continues to achieve strong asset growth.
Khara’s remarks come amid growing concerns from the Reserve Bank of India (RBI) and the government regarding the deceleration in deposit growth across the banking sector. With credit growth slowing to 13.8 percent in the last fortnight and deposit growth dipping to 10.3 percent, the issue has drawn significant attention.
RBI Governor Shaktikanta Das has raised the alarm multiple times, while the finance minister recently urged public sector banks to develop innovative strategies to attract more deposits.
Khara on these concerns said: “We are in a position to support our loan book growth well and so long as we can do that, I don't think we have any challenge.” He emphasized that SBI is managing its resources by unwinding excess investments in government securities—currently over Rs 16 trillion—to ensure sufficient funds for lending.
In the first quarter of the current fiscal year, SBI recorded an 8.18 percent year-on-year growth in deposits, reaching Rs 49.02 trillion, up from Rs 45.31 trillion in the same period last year. However, there was a slight sequential decline of 0.29 percent in deposits.
As Khara prepares to step down on August 28 after nearly four years at the helm of SBI, he reiterated the bank's ability to sustain growth through strategic resource management. SBI in its latest report had challenged the perception that deposit growth in the banking sector is slowing, calling it a "statistical myth."
While it's true that credit growth has outpaced deposit growth in recent years, the report argues that a deeper analysis paints a different picture. In FY23, All Scheduled Commercial Banks (ASCBs) recorded the highest absolute growth in both deposits and credit since 1951-52. Deposits surged by Rs 15.7 lakh crore, while credit grew by Rs 17.8 lakh crore, pushing the incremental Credit-Deposit (CD) Ratio to 113 percent. This momentum continued into FY24, with deposits rising by Rs 24.3 lakh crore and credit by Rs 27.5 lakh crore.
Contrary to the narrative of a deposit slowdown, the data reveals that since FY22, incremental deposit growth has actually outpaced credit growth, with deposits increasing by Rs 61 trillion compared to Rs 59 trillion in credit.
As the report notes, "Decadal deposits have expanded by a sharp 2.75 times, while decadal credit has grown by 2.8 times."