SBI Supports PSU Bank Mergers to Enhance Scale and Credit Growth

State Bank of India has expressed support for another phase of PSU bank consolidation, highlighting the need for larger lenders to meet India’s rising credit demand. 

SBI Supports Another Round of PSU Bank Merger  

SBI Chairman Challa Sreenivasulu Setty said in an interview with Bloomberg that more rationalisation among state owned banks may be beneficial as several lenders remain sub scale.  

SBI currently manages nearly 1 quarter of India’s ₹1,94,00,000 crore loan market and has total assets of $787 billion with over 22,500 branches. Setty noted that stronger banks are essential as India aims for significant investment expansion and long-term economic growth. 

Credit Growth Outlook and Economic Context 

India’s path toward developed economy status by 2047 requires bank credit to rise to around 130% of GDP from the current 56%, alongside a projected 10-fold increase in GDP to USD 30 trillion.  

Despite pressure from US tariffs on export sectors, SBI stated that it has not seen material stress and continues supporting exporters. The bank recently lifted its full year credit growth outlook to 12–14%. 

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Competition for Corporate Lending and Market Expansion 

Setty highlighted early signs of private sector capital expenditure revival but noted increasing competition for high quality corporate lending opportunities. SBI’s assets currently stand at nearly ₹69,00,000 crore, while HDFC Bank follows with about ₹40,00,000 crore. Setty, with 4 decades at SBI, said the bank aims to grow its market share further. 

M&A Financing and Wealth Management Push 

SBI commented on the proposed regulatory framework allowing banks to directly finance mergers and acquisitions. Setty said pricing may soften as more low-cost lenders participate but emphasised that risk assessment remains essential.  

The bank is also strengthening its wealth management capabilities, hiring 1,000 relationship managers in the past year and creating 2,000 internal roles. SBI now operates wealth hubs in over 110 micro markets and plans to add 50–100 more within 2 years. 

Conclusion 

SBI’s openness to further PSU bank mergers aligns with its broader strategy to enhance scale, credit capacity and competitive positioning as India’s financial sector expands. 

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