Chairman of the State Bank of India Challa Sreenivasulu Setty | Photo credit: SHASHNK PARADE
“Further rationalization could make sense. There are still some smaller, smaller banks,” Challa Sreenivasulu Setty, chairman of the country’s largest bank, said in an interview with Bloomberg News in Mumbai. “If another round happens, that might not be a bad idea,” he said.
Mumbai-based SBI controls about a quarter of India’s ₹194 lakh crore ($2.18 trillion) loan market. A wave of local mergers over the past decade has seen 12 state-owned lenders compete with private and foreign players such as HDFC Bank Ltd and HSBC Holdings Plc. With a balance sheet of $787 billion, SBI dominates the sector, along with its more than 22,500 branches and over 500 million customers.
India is discussing options to create major sovereign lenders, in line with the government’s need to finance massive infrastructure and industrial projects in Asia’s third-largest economy. Prime Minister Narendra Modi has set a goal of transforming India into a developed economy by 2047. That vision calls for bank financing to rise from 56 percent currently to about 130 percent of gross domestic product, supporting a projected tenfold increase in GDP to roughly $30 trillion.
Currently, only SBI and HDFC Bank are in the top 100 global sectors by total assets. China and the US have rivals among the top 10, according to data compiled by Bloomberg.
While China and India under President Donald Trump have been saddled with some of the highest U.S. tariffs, New Delhi is pushing through reforms, including tax cuts, to lure foreign investment and take advantage of a change in global supply chains.
Setty, who took up the top job at the bank in late 2024, said while exports were affected by additional US tariffs, SBI is yet to see any major problems in any sector. “We are not reducing any exposure, we continue to support exporters. If temporary adjustments or facility expansions are required, we will address them,” he said.
SBI, which is 55 percent government-owned, is seeing signs of a sector-wide revival in corporate capital spending, but loan pricing is getting tighter. “There are a lot of banks looking to build corporate portfolios, but only a limited number of large corporates – so that segment will remain very competitive,” Setty said. Last month, the lender raised its forecast for credit growth from 11 to 12 percent, to 12 to 14 percent for the current year.
Setty, an SBI veteran of nearly 40 years, had humble beginnings. From the age of 12, he spent his school holidays collecting debts for his father’s grocery store in the small south Indian village of Potlapadu. At the state-owned bank, one of Setty’s key roles after the coronavirus lockdown was to lead the recovery of SBI’s pile of bad loans of nearly $20 billion.
According to Setty, SBI wants to further increase its market share. “Even as a dominant player, our approach is not about defending market share, but about gaining more market share,” he said, adding that he does not see competition from foreign capital as a threat. The company has total assets of nearly ₹69 lakh crore, with HDFC Bank taking the second spot with ₹40 lakh crore.
A wave of multi-billion dollar transactions in India’s banking sector has put the financial sector in the global spotlight as investors look for opportunities in the country. This builds on the momentum of foreign players investing in insurance and fintech companies. Shares of SBI have risen 19 percent in the past year, compared to a 16 percent rise in the Nifty Bank index.
At the same time, authorities have proposed a framework that would allow lenders to directly finance corporate takeovers, a move expected to boost the country’s deal market, which is worth more than $40 billion. The draft guidelines ensure that no bank is excessively exposed to M&A lending, Setty said.
“On pricing, I expect some softening as more players, especially Indian lenders with access to cheaper funds, will enter this playing field, he said. “However, M&A financing should not be treated as simple balance sheet financing. Each deal carries specific risks, and pricing should reflect that, Setty said.
As the country becomes a global wealth management hotspot, banks are ramping up their offerings and hiring aggressively to meet growing demand, thanks to robust stock markets and real estate transactions. The company has hired 1,000 wealth relations managers in the past 12 months, Setty says, adding that 2,000 roles have been created internally to cater to its high-net-worth clients.
Setty said the lender has identified more than 110 micro-markets, mainly located in India’s metropolises and major urban centers, where it has opened so-called wealth hubs for customers. It plans to add another 50 to 100 hubs over the next two years.
More stories like this are available at bloomberg.com
Published on November 14, 2025
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