State Bank of India is preparing for a loan growth higher than its earlier full-fiscal target of 11%, driven by the Reserve Bank of India’s credit reforms, the government’s lowering of tax rates and a revival in consumption.

The country’s largest bank expects its corporate and retail loans to accelerate in the second half, allowing it the space to lift its credit target for FY26 to 12-14%.

"RBI's reforms are definitely credit accretive. This alone will raise industry-wide credit growth by a percentage point. We are now revising our loan growth guidance from 11% to 12-14% for FY26," SBI chairman CS Setty said at the post-earnings press conference. 

Credit growth in the first half of the current fiscal was punctured by sluggish demand for loans by corporates. Despite a strong sanctioned pipeline, SBI's corporate loan book grew at 5.7% and 7.1% year-on-year during the fiscal’s first and second quarters, respectively.

Setty believes that the RBI’s policy steps and the fiscal measures through the GST (goods and services tax) rate rationalisation will lead to sustained demand consumption. 

The RBI issued draft guidelines allowing banks to fund mergers and acquisitions and raised the ceiling on loans for buying shares at initial public offerings (IPOs) and follow-on public offers (FPOs) to enhance credit flow. Since February this year, the RBI-led monetary policy committee (MPC) has lowered repo rate by 100 basis points to bring it down to 5.50%.  

The government also cut GST taxes on several consumer items, effective 22 September, to boost demand.

“We believe that there will be sustained consumption demand, which gives an opportunity for us particularly in the retail, agriculture, and micro, small, and medium enterprises segments," Setty said.

SBI’s RAM (retail, agriculture and MSME) portfolio crossed Rs 25 lakh crore in the September quarter. The state-run lender’s gross advances rose 12.73% year-on-year to Rs 44.20 lakh crore, led by strong retail credit growth amid festive demand and tax rate rationalisation.

SBI expects corporate loans to post double-digit growth in the second half of the financial year. Ashwini Tewari, managing director, corporate banking and associates, said the bank has a corporate pipeline of over Rs 7 trillion. Most of the credit consists of term loans for capital expenditure.

For the quarter ended September 2025, the bank’s retail personal loan portfolio rose 14.09% YoY to Rs 15.93 lakh crore, while the corporate segment grew 7.10% to Rs 12.39 lakh crore. SME (small and medium enterprises) credit grew 18.78% YoY to Rs 5.42 lakh crore while agri loans rose 14.23% to Rs 3.68 lakh crore. Infrastructure lending, however, contracted 2.98% YoY, led by declines in telecom and roads & ports exposures.