SBI Chairman CS Setty has said that Rs 25,000 crore equity capital raised through the qualified institutional placement (QIP) route earlier this year would support credit growth of Rs 12 lakh crore while maintaining a capital adequacy ratio of 15% over the next five to six years.

On the debt capital side, the bank would mobilise Rs 12,500 crore through bonds in FY26 as part of a periodic exercise.

"Even before this QIP was raised, our ability to fund credit growth has never been a problem. We wanted to strengthen the capital ratios, so we have done that. Our long-term strategy is to maintain CRAR at 15 per cent and Common Equity Tier 1 at 12 per cent," Setty told PTI in an interview.

This kind of Capital to Risk Asset Ratio (CRAR) gives the bank the ability to fund advances over Rs 12 trillion, he said.

"With a profit rate what we have today, if the same profitability is maintained for another 5-6 years, we may not require any capital raising, at least on the CET 1 part," PTI quoted him as saying.

SBI had raised Rs 25,000 crore in July this year through a QIP, marking the largest such issue in Indian capital market history. Before this, the bank had raised Rs 15,000 crore via QIP in June 2017.

On fund raising from Tier II bonds, Setty said the bank does it periodically to replace maturing papers. This year the bank would be raising another Rs 12,500 crore through such bonds, he noted.

Setty said the bank would achieve its 3% net interest margin guidance even if the Reserve Bank of India decides to cut the repo rate by 0.25% in the upcoming monetary policy review.

He expected the RBI’s decision next Friday would be a "close call". The internal view in SBI is pointing towards a shallow cut of 0.25%, he noted.

"...if a December rate cut is there, but our house view again is that it would be a shallow rate cut of 0.25 per cent, so it may not have any significant impact on the margins," he told PTI.

RBI Governor Sanjay Malhotra earlier this week said that there is space for a rate cut, and recent macroeconomic indicators have strengthened market expectations.

Setty expects Q2 real GDP growth at 7.5% and 7% for FY26.

"...the higher growth rate also poses some sort of communication challenge for the RBI. So when the higher growth rate is there, how is that rate cut is undertaken, but the softer inflation indicates that there is room for a rate cut," he explained.

Setty said banks faced challenges due to the 1 percentage cut in the cash reserve ratio (CRR) this year but noted that SBI has multiple levers to protect profitability.

These include full benefit of the CRR cut, making available more funds for lending; repricing of fixed deposits that were locked at high rates earlier; and gains from the 0.2% cut in savings account interest rates.