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State Bank of India (SBI) has expressed support for another round of mergers among public sector banks as policymakers explore strategies to create larger lenders capable of financing India’s ambitious growth plans.

“Some further rationalisation might make sense. There are still some smaller, sub-scale banks,” Challa Sreenivasulu Setty, chairman of India’s largest bank, told Bloomberg News in Mumbai. “If another round happens, it may not be a bad idea,” he added.

SBI: A Dominant Player With Eye On Expansion

Mumbai-based SBI controls roughly one-quarter of India’s Rs 194-lakh crore loan market. Following a decade of consolidation that left 12 state-owned banks competing alongside private and foreign players such as HDFC Bank Ltd. and HSBC Holdings Plc., SBI continues to dominate the industry with total assets of $787 billion, more than 22,500 branches, and over 500 million customers.

Setty, who took over as SBI chairman in late 2024, said the bank’s approach is not merely to defend market share but to expand it further. “Even as a dominant player, our approach isn’t about defending market share but acquiring more,” he noted. He also downplayed competition from foreign capital, asserting it is not a threat to the bank.

Strategic Imperative: Financing India’s Growth

India is considering options to create larger state lenders to support infrastructure and industrial projects essential for its development goals. Prime Minister Narendra Modi has set a target to transform India into a developed economy by 2047, requiring bank financing to rise to 130% of GDP from the current 56 per cent, to support an expected ten-fold growth of GDP to roughly $30 trillion.

Currently, only SBI and HDFC Bank rank among the top 100 global banks by total assets, highlighting the potential for further consolidation to strengthen India’s banking sector.

Export Support Amid Global Challenges

Addressing global trade headwinds, Setty said that while US tariffs have impacted exports, SBI has not curtailed exposure to any sector. “We are not pruning any exposure, we continue to support exporters. If any temporary adjustments or facility extensions are needed, we’re addressing those,” he said.

The bank has also raised its forecast for credit growth to 12–14 per cent for the current fiscal year, up from the earlier guidance of 11–12 per cent.

Wealth Management And M&A Expansion

Setty highlighted SBI’s push into wealth management, noting that the bank hired 1,000 wealth relationship managers over the last 12 months and internally created 2,000 additional roles to cater to high-net-worth clients. The bank has identified more than 110 micro-markets for wealth hubs and plans to add 50–100 more hubs over the next two years.

SBI is also preparing to participate actively in corporate takeovers, following a proposed framework enabling lenders to fund M&A deals while managing exposure and risk. “As for pricing, I expect some softening since more players, especially Indian lenders with access to lower-cost funds, will enter this space,” Setty said.

SBI’s Legacy And Leadership

Setty, a nearly 40-year veteran of SBI, started his career collecting debts for his father’s grocery store in the south Indian village of Potlapadu. Post-pandemic, he has overseen the recovery of SBI’s nearly $20 billion bad-loan pile and continues to steer the bank toward growth while maintaining strong risk management and strategic expansion.