C S Setty, the chairman of State Bank of India, told Business Standard’s BFSI Summit on 20 March that the central bank will lift rates by 50 basis points in December, a move the bank expects to tighten discretionary consumption credit.
He added that while higher rates will shift the mix of credit demand, the overall growth of credit should remain robust, with the economy projected to expand by 7.1% this year.
Setty warned that individual borrowers might feel the pinch as loan rates climb, yet he dismissed fears of a systemic credit‑quality crisis. The bank’s focus will remain on productive lending, which he believes will stay on track.
On deposits, Setty noted a structural shift in household savings: more people are allocating assets across different instruments, even if they are not consciously aware of it. He said that rate hikes can only do so much to drive deposit mobilisation; the quality of banking services now matters more.
The chairman also highlighted that liquidity supplied by the RBI and inflows of foreign currency non‑resident deposits will cushion the market, preventing a rate‑driven scramble for deposits. He expects market movements to trigger modest rebalancing of household savings, but no dramatic upheaval.
The next RBI policy meeting on 28 March will decide whether to implement the predicted hike, a decision that will shape credit and deposit dynamics for the coming months.