State Bank of India may be taking the higher road as it joins the scramble for customer funds without resorting to a rate war, but its outlook signals an extended industry struggle for deposit growth.
At its Q2 earnings call on Friday, India's largest bank tempered its guidance on deposit growth to 10-11% from 12-13% for 2024-25 as customers might have now found more lucrative investment avenues. Slowing deposit growth remains a worry for the industry.
SBI chairman C.S. Setty, who took over from Dinesh Khara at the end of August, said the bank has introduced new products, value-added services, and premium banking services to attract high-quality customers.
"We would like to compete on the quality of customer service, not on increasing the deposit rates, while we adequately compensate our customers in terms of interest rates," said Setty, reiterating his stand that SBI would not engage in a rate war to attract customer deposits.
State-owned banks are going the extra mile to lure depositors, offering them an average term deposit rate that's the highest in almost eight years, as Mint reported.
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