State Bank of India (SBI) is not facing any serious challenge on the deposit growth front and has been able to support its strong loan book growth, the state-run lender’s chairman Dinesh Khara said.

Khara’s statement came in the backdrop of the banking sector facing a situation where credit is outpacing deposit growth.

As per the latest RBI data, credit growth stood at 13.8% for the last fortnight while deposit accretion slowed to 10.3%.

“We are in a position to support our loan book growth well. So long as we can do that, I don't think we have any challenge,” Khara told reporters on the sidelines of an ICAI event.

For nearly two years, deposit growth has been trailing credit expansion for the banking system. The country’s largest lender is also witnessing this trend.

In the fiscal first quarter ended June, SBI reported an 8.18% growth in deposit to Rs 49.02 lakh crore compared to Rs 45.31 lakh crore a year ago. Credit grew stronger at 15.39% during this period.

Khara, who will end his innings at SBI on 28 August, said the bank has an investment book of over Rs 16 lakh crore  and is unwinding a part of the excess SLR (statutory liquidity ratio) to support the loan growth.

The bank ensures that the returns on the funds are higher in lending than the yields on investments, he added.

Khara expects the deposit and credit growth to converge only by June-September 2025.

When asked about the challenge of deposit growth in the banking system and the booming mutual fund industry, Khara said in developing countries the banking system generally surpasses the size of the markets. 

“When we look at the developed markets, there we have seen the markets become bigger than the banking system. But as of now, of course, in the developing countries, we have generally seen that the banking system is bigger than the size of the markets… Even in the UK, the banking system continues to be bigger than the markets. So, I think much of it will be the choice of the investors and the kind of products which will be rolled out by the banking system,” he said.