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SBI maintain 20% of GDP as asset portfolio, aims to grow to 25%, says Chairman CS Setty

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  Published in Business and Finance on Wednesday, November 5th 2025 at 23:03 GMT by moneycontrol.com
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SBI Targets a 25% Share of India’s GDP in Its Asset Portfolio, Says Chairman CS Setty

The State Bank of India (SBI), India’s largest commercial bank, has announced that it is working to grow its asset‑portfolio share from the current 20% of the country’s gross domestic product (GDP) to 25% in the near future. The target, revealed in a recent interview with Chairman CS Setty, signals a major shift in the bank’s strategy and underscores the broader policy push by the Reserve Bank of India (RBI) to strengthen banks’ balance sheets.

The Current Landscape

As of the latest reporting, SBI’s asset portfolio represented roughly ₹18.9 lakh crore, which is about 20% of India’s GDP. This figure places the bank among the handful of institutions that have a significant macro‑economic footprint. The RBI has long insisted that large banks should hold a minimum share of the country’s credit market to ensure financial stability and prudent risk management.

In January 2023, the RBI released a new set of Asset‑Portfolio Management (APM) guidelines that require banks to maintain a portfolio share of no less than 15% of GDP. These guidelines, part of the RBI’s broader prudential regulatory framework, aim to prevent concentration risk and promote diversification across sectors and geographies.

Setty’s Vision for 25% Share

Chairman CS Setty explained that the 25% target is not merely a number; it is part of a broader strategy to deepen the bank’s presence in the economy and to support the government’s goals of inclusive growth. The plan involves:

1. Targeted Lending: SBI plans to increase credit flow to priority sectors such as agriculture, small and medium enterprises (SMEs), and infrastructure, while maintaining a strong risk profile. By focusing on high‑growth sectors, the bank expects to capture a larger share of the domestic credit market.

2. Geographic Expansion: The bank will intensify its outreach in underserved and rural regions. Expansion of the branch network and digital banking platforms will enable SBI to tap into new customer bases and capture a larger volume of deposits and loans.

3. Digital Transformation: Setty highlighted the role of digital technology in scaling up the bank’s operations. By leveraging mobile banking, AI‑driven credit underwriting, and fintech partnerships, SBI can improve efficiency and reduce operational costs, thereby supporting higher asset volumes.

4. Capital Adequacy Management: SBI intends to maintain robust capital buffers in line with Basel III norms. A higher asset portfolio will be supported by a sound capital base, ensuring that the bank can absorb potential shocks without compromising on growth.

5. Risk Mitigation: The bank will adopt advanced risk management practices, including stress testing, credit risk analytics, and diversified collateral structures. This approach aims to mitigate the risk of non‑performing assets (NPAs) while expanding the portfolio.

RBI’s Support and Regulatory Context

The RBI’s recent policy changes have created an enabling environment for banks like SBI to expand their asset base. The new APM guidelines introduced stricter limits on the concentration of credit exposure, mandatory loan loss provisioning, and a framework for the monitoring of the bank’s asset quality.

Moreover, the RBI’s policy on "Targeted Credit Allocation" encourages banks to increase lending to under‑banked segments and to comply with the "Banking Sector Recovery and Restructuring" (BSRR) framework. SBI’s strategy aligns with these directives, positioning the bank as a key driver in achieving the broader macro‑economic objectives of the government.

The RBI has also signalled its willingness to provide incentives for banks that demonstrate a strong growth trajectory in sectors that are essential for national development. For example, priority sector lending (PSL) and green financing initiatives are being promoted with tax incentives and favorable regulatory treatment.

Implications for the Financial System

An increase in SBI’s asset‑portfolio share from 20% to 25% will have several notable effects:

• Liquidity and Credit Availability: A larger loan book will increase the availability of credit across the economy, particularly for SMEs and rural enterprises, thereby stimulating investment and employment.

• Risk Diversification: By expanding into new sectors and geographies, SBI can reduce its concentration risk, potentially lowering its overall NPA levels over time.

• Systemic Stability: A larger, well‑managed bank can act as a stabilizing force during periods of economic stress. Its capacity to mobilize deposits and lend on favorable terms can help cushion the economy from shocks.

• Competitive Dynamics: SBI’s push to capture a larger share of the credit market may intensify competition among private banks and other state‑owned institutions. This could lead to better pricing, improved product offerings, and higher customer service standards.

Challenges Ahead

While the target is ambitious, Setty acknowledged that there are obstacles to be managed. The primary challenges include:

• Credit Quality Management: Maintaining a high level of asset quality while expanding the loan portfolio will require sophisticated underwriting and monitoring.

• Macroeconomic Volatility: External shocks such as global commodity price swings or domestic economic slowdown could impact loan repayment patterns.

• Regulatory Hurdles: Complying with evolving RBI guidelines and maintaining capital adequacy ratios will require continuous adjustments to the bank’s risk management framework.

• Digital Adoption Barriers: Although digital platforms can accelerate growth, there are challenges related to cybersecurity, data privacy, and user adoption in rural areas.

Looking Forward

Chairman CS Setty’s declaration marks a decisive step in SBI’s evolution from a traditional bank to a fully integrated financial services provider. By targeting a 25% share of GDP, SBI signals its commitment to playing a pivotal role in India’s economic development. The bank’s approach—anchored in prudent risk management, technology adoption, and a focus on priority sectors—positions it to drive significant growth while safeguarding systemic stability.

The broader financial ecosystem will closely watch how SBI navigates the complex interplay of growth and risk. If successful, SBI could set a benchmark for other large banks, potentially reshaping the dynamics of credit distribution and financial inclusion across the country.