State Bank of India Chairman C S Setty announced the bank will keep deposit rates steady for the next three months, citing excess liquidity in the banking system. This decision follows the Reserve Bank of India's recent 25 basis point repo rate hike. Investors are monitoring how this liquidity surplus and a 14-15% loan growth target will influence the bank's profit margins in the upcoming quarters.
State Bank of India (SBI) has decided to maintain its current deposit interest rates for at least the next three months. Chairman C S Setty confirmed this stance, explaining that the banking system currently holds an excess of liquidity, which reduces the immediate need for the bank to increase rates to attract deposits. This development comes immediately after the Reserve Bank of India (RBI) increased the policy repo rate by 25 basis points, effective October 7, 2026.
Impact on Margins and Growth
The bank remains optimistic about its financial performance despite the changing interest rate environment. Chairman Setty expects that the bank's net interest margins—the difference between the interest income earned on loans and the interest paid on deposits—will remain robust and likely expand over the next two to three quarters. Because a significant portion of the banking sector's loan portfolio is linked to external benchmarks, the bank can reprice its assets relatively quickly, which helps support profitability even while deposit costs remain stable.
SBI has set a target for credit growth between 14% and 15% for the current fiscal year. The management believes that sustaining this level of loan expansion is vital for supporting broader economic momentum. To achieve this, the bank is continuing its focus on digital transformation and deepening its financial inclusion efforts to make existing accounts more active and useful to consumers.
Market and Risk Perspective
SBI's stock was trading near ₹948-₹949 on October 8, 2026, showing minor volatility following the news. While the bank is currently confident, investors may continue to track the broader liquidity environment. A key monitorable for the banking sector is how effectively the RBI manages to absorb excess liquidity through instruments like the Standing Deposit Facility. If liquidity levels tighten significantly, it could eventually force banks to raise deposit rates to secure funding, which might put pressure on net interest margins.
Furthermore, the bank's ability to maintain its margin guidance will depend on how interest rate trends evolve in the coming quarters and whether demand for loans remains consistent with the targeted 14-15% growth. Macroeconomic factors, such as potential volatility in global crude oil prices and ongoing geopolitical tensions, also remain points of caution for the banking sector as a whole.