With a loan book of nearly ₹50 trillion, State Bank of India (SBI) is by far India’s largest bank. It has also spawned a clutch of businesses that stand on their own, and some of the bank’s bets, such as in the National Stock Exchange of India Ltd, are set to bring in multiples of its initial investment.
In an interview with Mint, Challa Sreenivasulu Setty, SBI’s 27th chairman, said the 71-year-old bank is seeing a greater share of young customers and its customer satisfaction scores improving. The state-owned bank’s stock has also performed better than that of its private-sector peers, rising 28% since Setty took charge on 28 August 2024, while ICICI Bank Ltd’s shares were up 10% and HDFC Bank Ltd’s down 5% over the same period.
Setty, asserting that the bank’s state ownership never came in the way of it adopting new technology and digitalisation, insisted SBI deserves a better valuation. As on 19 June, SBI had a market capitalization of about ₹9.56 trillion. ICICI Bank had a market cap of ₹9.67 trillion and HDFC Bank, ₹12 trillion.
Setty also highlighted the bank’s three-pronged artificial intelligence () strategy and said the banking industry’s credit growth could increasingly be funded through bonds and market instruments, not just deposits. Edited excerpts:
It has been nearly two years since you took charge as SBI’s chairman. You assumed office during a period of significant change in both the digital landscape and the economic outlook. What were your immediate priorities?
I did mention when I took over in August 2024 that my predecessors had at least one big problem to solve—be it asset quality or consolidation or market share. When I took over, there was no defining problem. That itself was a big problem. How do we build our next step, the next inflection point for SBI?
I felt I should focus on a few things as chairman. One was to launch a state-of-the-art, built-from-scratch 2.0 (SBI’s banking and financial services app), and I am very glad that we launched it last year. It has attracted a lot of positive reviews and a good number of registrations.
The second important item I had in mind was strengthening the bank’s capital. This was always a regulatory concern: that a large bank like ours was not well-capitalised, while we felt we had enough growth capital. I was very fortunate that the government of India agreed to my proposal to raise capital, although it would mean some dilution of its stake.
We had one of the most successful and large QIPs (qualified institutional placement of shares in July 2025 to raise ₹25,000 crore from institutional investors), which has strengthened our capital ratios today. We are much better positioned, both from a regulatory and a growth-capital perspective.
The third thing was preparing the bank for the future. We have embarked upon Project Saral for Operation Process Reengineering. It is one of the most important activities close to my heart, and it is shaping up well.
Were there any surprises when you took over as chairman?
There were no specific surprises. But if I really have to call out one surprising thing—that was despite being on SBI’s board for four years as managing director and pretty much doing everything that is important, right from the retail business and technology to global markets—I realized that nothing prepares you to be chairman of this complex institution. The position of chairman entails a greater responsibility and a dramatically altered stakeholder landscape.
SBI is a shareholder in NSE, which is planning an IPO. Plus, there is a listing planned for SBI Funds Management. How do you see the outcome of SBI’s investments, and how would you allocate money to your other initiatives?
We have almost 18 non-banking subsidiaries catering to every financial need in the country. Our initial investment in these subsidiaries was in the range of around ₹6,000 crore. Today, the value of our shares in these subsidiaries is around ₹3 trillion.
However, it is more than just the multiplication in value. I believe that SBI’s contribution through its subsidiaries has been the setting of strong benchmarks and providing high-quality governance in the areas where we operate, be it asset management, life insurance, or non-life insurance. In the process, of course, we created value to the parent company too.
As far as is concerned, it is a great story of strategic investment by SBI. We were the initial shareholders of the Bombay Stock Exchange and NSE. During the last few years, of course, we monetised the BSE shareholding. NSE, again, we would definitely take a call on participating in the IPO process.
You mentioned in 2024 that customer service was one of your priorities. Do you think you have been able to make a change in the way SBI’s customers are served?
Customer service is a dynamic activity. You are always in catch-up mode. The more you work on customer service improvement, the expectations always seem to be ahead of that work. Despite that, I think the quality of customer service as measured in terms of customer satisfaction (CSAT) score or net promoter score (NPS) has seen a marked improvement. Across channels, I see good improvement, with customer satisfaction levels rising.
If I have to measure customer satisfaction, there are two things. One is what is our attrition rate in the accounts, or how many accounts become non-operational? That percentage is coming down.
Second is how many new customer acquisitions are happening. Today, we acquire around 60,000 to 65,000 new customers every day. The other indicator is whether such acquisition is across the age groups. Over 33% of our customer base is now below 30 years. That means we have to be the preferred banker across demographics and geographies. We are doing well on that front.
While the numbers show that SBI’s customer service has improved, do you think SBI also suffers from a perception issue when it comes to customer service vis-a-vis the private banks?
It is not a perception issue, but customers demand more from . Recently, we engaged an agency to understand what customers expect from SBI. They went to a customer who has three different bank accounts. They came back and told me the way they expect customer service from SBI is significantly different from what they expect from other banks.
It is a good thing, right? Many customers believe this is my own bank and that it should serve me better. It also stems from the fact that most customers have a good relationship value with us, whether in terms of holding deposits or taking loans. As the relationship value is higher, the demand for quality customer service increases. To that extent, it is always a constant challenge for us to meet customer service expectations.
The other dimension for SBI is the extremely diverse customer base expecting the same high-quality service. That also puts pressure on the branch as a service point.
But I feel both digital services and other alternative channels are operating on a common ground. At branches, we are working on various avenues to simplify and improve our processes to facilitate a happier customer experience.
Which sectors do you see as having high potential for credit expansion?
Conventional industries like steel and cement seem to be generating a lot of cash, and they will, therefore, have strong internal accruals. While they do have plans of capital expenditure going forward, they may not be borrowing significantly from the banking industry.
Among the core industries, I see the power sector coming back in a big way. It is not only in India. Globally, everyone is focusing on energy now after the West Asia conflict. We are seeing a good amount of demand coming from this sector.
MSME (micro, small, and medium enterprises) is definitely a sector that is growing well. Some of them were probably borrowing earlier from informal channels. With availability of reliable data, mainstream banks are more confident about lending to MSMEs. At SBI, MSME loan approvals are processed within 15 to 20 minutes. This also gives them confidence of applying to a mainstream bank.
As for retail, it will continue to play a significant role in credit growth. Whether it is home loans, gold loans, or even unsecured personal loans.
Some predict that, over time, raising deposits will become a challenge for banks. What is your view on this?
The landscape of household savings is changing and much has been written about the financialization of savings. Bank deposits are also part of financialization, and diversification of that financialization is underway. Much of this is irreversible, irrespective of what returns equity markets give.
Broadly, I think people are doing asset allocation without really thinking about it. It is not necessarily just mutual funds. We are seeing good flows into pensions through the NPS (National Pension System) and good investments in insurance, which means household savings will be diversified. Banks need to determine, going forward, how they will fund their credit growth in this changing landscape.
As we go forward, the liability side of banks’ balance sheets will definitely take a different form. It will not be purely funded by deposits. I think, going forward, there will be bonds and other market instruments coming into play.
What is your assessment as the head of India’s leading bank on India’s economic outlook?
Thirty-seven years of banking have made me a die-hard optimist on the Indian economy. I believe India is a long-term growth story. People who believed in this long-term story were rewarded in the past, including with SBI stock. We believe that we are a proxy to the Indian economy, and we have been telling all our investors that instead of looking at SBI for one or two quarters, you need to be a long-term investor.
From that angle, India has always been a growth story. I believe that despite the headwinds we have faced, India has been successfully weathering them. The West Asia crisis also exposed what kind of vulnerabilities—particularly on the energy side—we can face, and policymakers, the government, bankers, everybody is very keen to try and ring-fence the Indian economy from these kinds of energy shocks.
Given the number of branches you have and the number of people you employ, what kind of AI use-cases are you seeing?
We have been early adopters of conventional AI-ML (artificial intelligence-machine learning) models. GenAI (generative AI models such as ChatGPT and Google’s Gemini) and agentic AI (capable of operating partially or fully autonomously with minimal human oversight), for our scale, provide excellent use cases. The scale benefit can be augmented through AI models and tools.
Our approach to AI is based on three fundamental pillars. One is responsible AI. As an institution like SBI, we need to see that all our AI models are ethical and responsible.
The second thing is that AI should help two important stakeholders. One is our employees. Are they becoming more efficient? The other is our customers. Do they see any qualitative difference in their interaction with SBI?
The third pillar is whether (AI) helps me in better governance and better risk-management. On the use cases for risk management, we will be deploying both genAI and agentic AI across proactive risk-management, fraud risk-management, and regulatory reporting.
On the customer side, we are rolling out large-scale marketing technology in which hyper-personalisation will be driven by AI models.
There is a perceptible change in investors’ outlook (towards SBI). There is a re-rating that you see in the market. Do you think there is still more to be done from their side?
The performance of SBI has always been ownership-neutral despite being a state-owned enterprise, which is definitely a great comfort to our customers. The state ownership never came in our way in adopting technology and digitalisation. I believe that we deserve a better valuation. I am very glad that with the re-rating, which has been overdue for quite some time, we at least started getting recognised on the valuation front.
You have experience in international markets at SBI. With many Indian companies going abroad, would SBI be the banker of choice?
I think our international presence is more geared towards servicing our Indian relationships. We would like to truly be an Indian (multinational) bank, where our Indian corporates see us as the first port of call.
Almost two-thirds of our book is actually India-related, whether through long-term loans in the ECB (external commercial borrowings) or on the trade-finance side. It is essentially funding the corporate relationships.
We are also one of the largest remittance-handling banks for the Indian diaspora. That focus will continue. We would like to build further on that by also providing M&A (mergers and acquisitions) solutions if there is an opportunity.
The RBI (Reserve Bank of India) has now allowed M&A through the local balance sheet. What kind of leveraged buyout opportunities are you seeing?
There are enquiries. Our approach to M&A is very calibrated. We are not in a hurry to build the book and would like to be sure that the transaction is acceptable to us. We also don’t mind working with other banks, particularly MNC banks, which have been very active in financing Indian M&As. Most of the transactions would be fairly large enough for all of us to work together. So we did a couple of transactions on a consortium basis and will continue to do that.
SBI recently tried to sell personal guarantees of a promoter whose company changed hands under IBC (Insolvency and Bankruptcy Code) long ago. Are there more such cases?
All efforts will be made to resolve these issues of residual personal guarantees. The corporate debtors have been resolved, but personal guarantees remain. We are looking at various ways, including filing for personal insolvency and any other resolution process, including settlement.
On the RBI’s FCNR(B) window, what kind of flows are you looking at? Are you also looking at ECBs?
We are looking at all three options that they (RBI) have given. One is FCNR(B) (RBI’s foreign currency non-resident term deposit scheme allowing the Indian diaspora to park overseas income in foreign currencies) deposit mobilisation, and we have activated our foreign offices. We also activated our NRI (non-resident Indian) branches. It is too early to look at the numbers. I think it will take some time to get traction.
We are also looking at whether any corporates are seeking ECBs and how we can provide that funding overseas.
If possible, we would also look to raise money on our own balance sheet through bonds or loans. We normally do not bring bonds or any loans we raise overseas into India but use them at our overseas offices. Now that the RBI is partially covering hedging costs, we are seriously considering bringing the funds into Indian operations.