GST, rate cuts to lift credit growth: SBI

Bank raises credit growth outlook to 12-14% from 11-12% earlier

- Subhana Shaikh & Shayan Ghosh

A gathering consumption wave is expected to lift credit growth beyond previous projections, India's largest lender State Bank of India said, as the combined effect of tax and interest rate cuts ripples through the economy.

The state-run bank on Tuesday said it expects FY26 credit growth at 12-14%, higher than the 11-12% it predicted as recently as August. The central bank's recent measures to smooth credit flow alone will raise industry-wide credit growth by 100 basis points, chairman C.S. Setty said.

SBI's net profit rose 10% in the September quarter, powered by gains from the partial sale of its Yes Bank stake in September. Total business, the sum of the bank's loans and deposits, crossed Rs 100 trillion, the first for any Indian lender.

"Based on many enablers which the Reserve Bank of India (RBI) has given, and also the fiscal measures through the GST 2.0, we believe that there will be sustained consumption demand, which gives an opportunity for us, particularly in the RAM (retail, agriculture and MSME) segment," Setty said after announcing SBI's September quarter earnings.

To be sure, SBI's credit growth guidance for FY26 assumes no rate cut in December and possibly one in March. In case of a December cut, the bank may revisit the guidance, Setty added.

In October, RBI allowed banks to finance mergers, and dropped an earlier plan to bar them from overlapping businesses, measures widely seen to increase the flow of credit.