Sagar Barde, a software professional in Pune, was toying with the idea of buying a car after his daughter, Hritanshi, was born two years back. But goods and services tax (GST) rates kept the car prices high and he decided to wait. When the government lowered the GST rates effective 22 September, Sagar took the plunge as the price of Maruti Dzire dropped by Rs 80,000. 

State Bank of India’s auto loan hubs got active with a nudge from Sukhwinder Kaur, the lender’s chief general manager in charge of retail loans, to meet the aspirations of thousands of customers like Barde who were upgrading from two-wheelers to their first cars during the festive Diwali season. 

In the month of October, the country’s largest bank financed 88,160 cars amounting to loans worth Rs 7,300 crore. “The reduction in GST rates has translated into a bumper month for car sales. Those who were sitting on the fence have plunged into the car loan market. The momentum has sustained and we are on days disbursing loans for 8,000 cars,” said Kaur.

As entry level car sales picked up with first-time buyers increasing in numbers, the bank’s average loan size reduced but volumes grew. “There was a huge rush for car loans across income levels. The average ticket size of our car loans fell from Rs 10 lakh to Rs 8.5 lakh during this period,” Kaur revealed.

Along with a sharp spike in gold and personal loans, Kaur is confident that the bank will cross the target of generating Rs 1 lakh crore of fresh retail credit in the current financial year. This excludes home loans, which is a separate business vertical for the bank and clocked 15.22% year-on-year growth to Rs 8.80 lakh crore in the September quarter.

“We are in a position where we are most likely to surpass our target of Rs 1 trillion of new retail loans (sans home) in FY26. We have achieved 50% of our target till October and the second half is already seeing rapid acceleration. We are also looking to upgrade our targets in gold loans,” said Kaur.       

A part of that confidence is led by the growth in the gold loan portfolio, which has already surpassed the year’s target of Rs 16,500 crore. SBI has done gold loans worth Rs 26,800 crore in the period between April-October, taking the outstandings book to Rs 76,000 crore. In the auto segment, the bank’s total loan book has reached Rs 1.33 lakh crore as of October out of a target of Rs 1.44 lakh crore set for FY26.

The turnaround in the pace of auto loans has also led Kaur to look at a higher retail loan target for the full-fiscal. The lender’s retail loan portfolio (sans home loans) has touched a total of Rs 7.26 lakh crore as of October against a target of Rs 7.70 lakh crore by the end of FY26.

This is in contrast to the relatively slower pace retail loans grew at during the previous fiscal. SBI’s focus lay on consolidating its unsecured loan portfolio even as the Reserve Bank of India (RBI) sounded warning bugles for the sector. As the Covid-19 pandemic had led to borrowers being over-leveraged, the regulator, in fact, increased risk weights on personal loans for banks and non-banking financial companies (NBFCs) in FY24. 

During the course of FY25, SBI adopted a cautious approach towards its flagship personal loan product for salaried individuals, which was until recently known as Xpress Credit. The lender strengthened its internal processes and implemented a uniform standard for underwriting to enhance credit quality and consistency. SBI’s retail loan portfolio (sans home loans) thus saw single-digit growth of around 8% YoY in FY25. The target has been pushed to 14% upwards for the current financial year.

Prompted by signals of strong loan growth, the RBI’s credit reforms, the government’s lowering of GST rates and a revival in consumption, SBI chairman CS Setty has revised the bank’s loan growth guidance from 11% to 12-14% for FY26. He has pointed out RBI’s recent reforms as being “definitely credit accretive”, which “alone will raise industry-wide credit growth by a percentage point”.  

The GST reductions on several consumer items are expected 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 at a post-earnings press conference.

The buzz in retail loans is yet to percolate to the bank’s corporate credit. Though SBI has been sitting on a strong pipeline of over Rs 7 trillion, the corporate loan book has seen single-digit growth in the first half, with postings of 5.7% and 7.1% during the fiscal’s first and second quarters, respectively, due to weak demand for disbursals. 

Setty is expecting the second half of FY26 to present a different script for corporate credit while retail loans, including housing, show a surge.