SBI chief warns December rate hike could curb discretionary credit demand

Speaking at the BFSI Insight Summit 2026 in Mumbai, State Bank of India chairman C S Setty indicated the Reserve Bank of India may lift its policy rate by another 50 basis points in December before pausing until March. He explained that while the hike will not instantly reshape credit markets, it will gradually reduce demand for loans linked to discretionary consumption and borrowing. Setty stressed that credit growth is still solid, driven by real-economy needs, and that financing for productive activities is unlikely to weaken.

The comments came after the RBI’s recent 25-basis-point increase to 5.5% and its revised inflation and growth forecasts. RBI Governor Sanjay Malhotra said future moves will depend on inflation trends and external risks such as the West Asia conflict and weather-related agricultural pressures.