We are in the midst of geopolitical turbulence. As a banker and chairman of the country’s largest bank, how do you see India’s economy weathering the storm?

Over the past five years, we have had Covid, global uncertainty in terms of disruptions, supply-chain issues, and trade shifts happening because of tariff barriers. But all through this, the Indian economy has stayed resilient. We have weathered uncertainties much better than many other countries globally. Though India is not decoupled from global disruptions, our economy is primarily driven by domestic consumption, not exports. While there will be some impact of the tariffs, I’m sure policymakers, regulators, and banks will work together to ensure that the sectors impacted are protected from any potential damage if the tariff issue is not resolved. But I’m confident that government-level intervention will result in some kind of resolution on the tariffs.

The government is now pushing capex, but India Inc. is taking its time to get back its animal spirits. How are you coping with this?

I believe the twin-balance-sheet problem has become a twin-balance-sheet advantage now. In fact, some people say it’s a triple-balance-sheet advantage because the government balance sheet is also cleaner now, and fiscal management is stronger.⁽¹⁾

This means the economy is primed for capital investment. Another interesting feature is that most of the core sector is working at about 75% capacity utilisation, which means it’s the right time for expansion.

So, what’s holding them up?

Obviously, we’ve had a series of disruptions. It’s not that private capex isn’t happening. It is happening in renewables, roads, data centres, and quite a few others.⁽²⁾ But the core sector used to consume very large credit, and they are holding up for some time. Two reasons: they want to see sustained consumption demand coming back, and most of these companies, with automation and technology, can operate at higher capacity utilisation without worrying about disruptions. Tech is helping them delay capital expenditure.

While capex will continue in the sectors I mentioned, the core sector will come back. One piece of advice I give to industry is when consumption demand comes back and demand for steel, for example, goes up, they should not wait for demand to stabilise. If they breach 75-80% capacity utilisation, it’s time to invest. I think they are all thinking along those lines, and if not animal spirits, at least some plans will materialise into actual spending.

SBI has a strong corporate pipeline (around ₹7.2 lakh crore sanctioned and in process). Will this convert into disbursements?

This pipeline has two components. One is working-capital lines, which we provide; that’s also part of the pipeline. These lines are related to capacity expansion, as higher working-capital limits are given. Another factor we must consider is the triple-balance-sheet advantage: most corporates are also sitting on good amounts of cash. That means working-capital utilisation will be somewhat depressed. But as capacities go up, utilisation will rise.

In terms of the capex pipeline, non-core activities are also strong. The credit markets have shifted as private capital expenditure measured by corporate credit in bank books is not the sole indicator anymore. Some capex is being funded internationally, which means it’s not reflected in our books. Once corporates exhaust internal cash flows, they will come to us, and that is one reason why the pipeline isn’t immediately converting into corporate credit. They will draw [credit] lines only after using their internal cash.

Do you see a decisive change in the culture of corporate credit? Are we entering an era where industrial credit is over, with retail credit now overtaking corporate credit?

Most of these requirements and journeys coexist. It’s not that conventional industries will disappear overnight. It’s a gradual shift as economies mature and become knowledge-based. In India’s context, I strongly believe that manufacturing will coexist with the knowledge economy. Services are dominant now, but with government support and employment requirements, manufacturing will remain critical because labour is still affordable in our country.

We shouldn’t look at corporate funding only from a bank’s lens. On the liability side too, savers are not looking only at banks. They’re exploring alternative opportunities. As the economy grows, the distribution between savers and users of savings will change. But banks will not lose their relevance in corporate credit. We should view corporate banking as a holistic relationship, not just lending.

With savers turning into investors, how does that affect banks like yours, which depend on CASA (current account and savings account) deposits?

Savers and investors may not be entirely different groups. They’re the same people allocating savings differently. Even putting money in a bank deposit is an investment; it’s a safer one. With the growth of mutual funds, digital access, and financial awareness, people are now allocating their savings between options. A new saver, say a young professional, may start by investing in market products. As income levels rise, they allocate more strategically. We must build this habit of balanced allocation: not all money in banks, not all in markets. Despite this change, bank deposits haven’t lost relevance. We still open 60–65,000 savings accounts every day, most of which get funded within a month. Savings in banks and investments in markets will coexist; it’s all about allocation.

Are you seeing the trend of CA moving out as corporates can park funds overnight in mutual funds instead?

Current accounts are essentially operational. We used to get substantial CASA balances from government accounts, but governments have become more efficient in cash management. That naturally reduces those balances. However, business current accounts have not declined. We’ve stopped selling current accounts as simple accounts; we now sell them as cash-management solutions. Liquidity management is built in as balances can move automatically into investment or sweep products. Business current-account balances are actually going up, though not enough to replace large government balances. But they’re far from irrelevant.

There are also structural changes in banking with NBFCs losing regulatory arbitrage, small finance banks aspiring to become universal banks, and mergers making banks larger. How do you see their evolving roles?

In a large country like ours we need variants of financial services entities. Mainstream banks such as SBI, with 23,000 touchpoints, still face challenges in last-mile credit delivery. NBFCs and MFIs have done a phenomenal job there. We have a collaborative relationship as banks provide capital, NBFCs provide reach. Co-lending and on-lending have helped us extend to the last mile. Variations are necessary because of differing cost structures. While operational arbitrage is narrowing, these entities still contribute uniquely. Each type, whether it is a bank, NBFC, or MFI, will have a role to play.

On credit pricing, you’ve said SBI will stay disciplined. How soon do you think credit demand will return strongly?

These are temporary phases. Twelve months ago, the concern was deposits; now it’s credit. India is a long-term growth story. We need both deposit and credit growth. RBI’s liquidity measures have strengthened banks’ ability to fund. There will always be equilibrium: if deposits lag, credit growth moderates; if deposits rise, credit growth will follow. The economy needs credit expansion, and banks have the capacity to fund it.

Are rising consumer lending and unsecured personal loans causes for concern?

Not really. There were some concerns around unsecured loans, but those have largely been addressed. Each entity follows its own model. For large banks like SBI, personal loans are effectively secured because they’re lent against salaries. There may be isolated stress cases elsewhere, but system-wide concerns are limited.

For the banking sector, with clean balance sheets, strong RoAs and RoEs, is it at peak performance? Can things only go south from here?

The current strong performance reflects benign asset quality. Globally too, we haven’t seen major asset-quality issues despite trade disruptions or tariffs. Post-global-credit-crisis, underwriting standards have improved significantly. Banking is cyclical, but maturity lies in delaying and managing cycles. Indian banks are better positioned now on both counts.

Are you comfortable with the MSME exposure, given potential tariff impacts?

Not all MSMEs have been impacted equally. If tariffs aren’t resolved, I expect targeted policy measures to support affected sectors. Policymakers, regulators, and banks will collaborate on solutions. We now know our MSME customers far better than before as data visibility has improved. GST and income-tax data allow us to understand cash flows and business models, enabling more confident lending. Earlier people said we weren’t lending enough to MSMEs; now they ask if we’re lending too much! I believe our approach is balanced.

How do you view infrastructure financing, now with new models and monitoring?

Infrastructure financing has matured. PPP models are now more stable, and banks are cautious about when and how funding is released. We focus on three key aspects: Clearances and rights-of-way must be secured before funding; second, quality of equity — we ensure it’s genuine, not leveraged. Promoters now bring in pure equity, sometimes aided by private-equity inflows; and third, monitoring — we have mandatory special-monitoring agencies for large projects, independent engineers, and real-time data. Underwriting, approvals, and monitoring have all improved, supported by abundant data.

How are you using tech and AI in SBI’s operations?

We’ve combined data from GST, income-tax, and bank statements into a Business Rule Engine for MSME loans up to ₹5 crore. Rolled out 14 months ago, it has processed loans worth ₹75,000 crore. The engine assesses whether we should finance, how much, and at what terms, using both current data and our own probability-of-default history from the past 15-20 years. The process, from application to approval, takes about 25-26 minutes, with the credit decision itself in under two minutes. Verification of business premises takes longer, but the credit engine is powerful, almost like a fintech, and in many cases built with fintech partners.⁽⁴⁾

Long-term strategy horizons have shrunk to two or three years. What are the top priorities for SBI?

For any organisation, especially in BFSI, adoption of tech and digitalisation is no longer optional... This has helped SBI tremendously over the past five to seven years since we launched YONO. Our balance sheet has doubled since 2018 without doubling headcount or branches, which shows how tech enables scale. We now serve about 560 million customers, acquiring around 60,000 daily.⁽⁵⁾ In UPI we hold roughly 30% market share. Our focus now is to leverage tech to defend and grow market share from 23% in deposits to 25%, and above 20% in loans.⁽⁶⁾ We expect total business (loans + deposits) to reach ₹100 lakh crore by the end of this fiscal and aim to double that in six to seven years.

How are you reimagining branches?

Physical branches won’t become irrelevant. They’ll evolve into value-added service hubs. They’ll onboard customers to digital channels and cross-sell products. We’re also focussing on YONO 2.0, a fully omnichannel experience. Whether customers use mobile, internet, or branches, the experience will be seamless. We’re rewriting our core code across all channels. This rollout should happen within this calendar year.

As you go more tech-heavy, would that also require more skilling and training for your workforce to ensure a consistent customer experience across digital and physical?

Human-resource development is crucial to prepare employees for this transformation, and SBI has done this well historically. When computers were first introduced in the bank, employees were actually given increments to use them. That culture of adoption continues today.

For the first time, we’ve done large-scale recruitment of around 1,500 specialists, not just coders, but subject experts in artificial intelligence, data science, UI/UX design, and related fields. They are permanent hires, not on contract. We believe we must build our own data and expertise.

We’re also improving information access for staff through AI. We’ve created a system called Ask SBI, powered by GenAI. Employees can ask, “How do I close a PPF account?” and receive not just an answer but a step-by-step procedure. It consolidates all circulars, SOPs, and manuals into one searchable knowledge base. This enhances service consistency across the bank.

Regarding your target to double the balance sheet again, will this require consolidation among public-sector banks?

No, our growth plan is purely organic. We’re not looking at mergers to drive it. If you assume nominal GDP growth of around 10% and SBI’s typical growth 2-3% above that, the compounding effect naturally doubles the balance sheet in six to seven years. We’re not expecting further public-sector bank consolidation to feed our growth.

When do you see SBI entering the top global tier of banks by size?

The size of banks corresponds to the size of their economies. JP Morgan’s balance sheet is about 13% of the U.S. economy; ours is already about 20% of India’s GDP. As the Indian economy grows towards $7-8 trillion, hopefully SBI’s asset size at 25% of GDP will place us if not in the Top 10 but in the Top 20 global banks by assets for sure. We’re already among the Top 50 today.

Where do you see SBI in the next few years — both during and beyond your tenure? Also, what’s your leadership mantra for leading such a large organisation?

SBI will increasingly become a digital-first bank, without losing its core values of customer-centricity, inclusiveness, and trust.⁽⁷⁾ The future of SBI is about digital trust, using tech to enhance reliability. For me, the leadership mantra at SBI is people orientation. Any service industry, and financial services in particular, must be people-focussed. That’s been the key to SBI’s success and mine as well.