State Bank of India is confident of achieving its 3% net interest margin guidance even if the Reserve Bank decides to cut the repo rate by 0.25% in next week's monetary policy review, Chairman C S Setty said.
In an interview with PTI, the SBI chairman said that the RBI decision next Friday will be a "close call" and added that the house view at SBI is pointing towards a shallow cut of 0.25%.
"...if December rate cut is there, but our house view again is that it would be a shallow rate cut of 0.25%, so it may not have any significant impact on the margins," he said.
31 October 2025
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Earlier this month, before the release of official data pointing to inflation cooling to the lowest ever rate of 0.29% in October, SBI had opined that RBI will opt for a pause in December and cut the interest rate in February.
Earlier this week, RBI Governor Sanjay Malhotra said that there is a space for a rate cut and it was mentioned in the last bimonthly policy in October.
The recent statement and macroeconomic indicators have trigged a widespread expectations of a rate cut in upcoming Monetary Policy Committee decision on December 5.
Setty, the chairman of the country's largest lender, said that with growth keeping up at high levels - the bank expects Q2 real GDP expansion at 7.5 per cent and 7% for FY26 - RBI will have to take a close call.
"...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 a room for rate cut," the SBI chairman said.
On the margins front - where all the lenders have had a difficult time due to RBI's 1% point cut this year - Setty affirmed that there exists multiple levers for SBI to protect the crucial number influencing profitability.
Aspects which will help the NIMs include the complete benefit of the 1 % point cut in cash reserve ratio, which has the potential to increase interest income as more resources get available for lending, repricing of the fixed deposits booked earlier at elevated rates and also the benefits of the 0.2 % cut in savings bank account rates announced earlier, he said.
Setty also reminded that only 30% of the bank's assets are linked to the external benchmark of repo rate, which will mean that a very small proportion of assets get repriced on a RBI rate cut and the pressure on margins is limited.
He, however, suggested that a RBI rate cut in February would have been more helpful from a NIMs perspective, as a bigger proportion of fixed deposits will get repriced by then.
After the September quarter earnings, when SBI had posted a 0.03% expansion in the whole bank NIM at 2.93%, Setty had exuded confidence of exiting FY26 with a NIM of over 3% in March quarter.
The domestic NIM for the bank has been above 3% consistently.
The SBI chairman added that the sequential expansion on the NIM in the September quarter was driven by liabilities management, where it was able to bring down the cost of resources.
