RBI MPC Decision Live: SBI MD Expects Credit Growth To Remain Strong After Repo Rate Hike

The Reserve Bank of India raised the repo rate at its monetary policy meeting on Wednesday, October 7, while State Bank of India’s managing director said credit growth should remain strong. The material does not specify the size of the increase, the new policy rate or any related liquidity measures announced by Governor Sanjay Malhotra. SBI shares were at Rs 957.65, down 0.1% for the day, 4.9% over one month and 7.9% over three months. The stock was 22% below its 52 week high, while banks had fallen 4.2% in one month and 3.8% in three months.

A higher repo rate tends to lift banks’ funding costs and can make loans more expensive, potentially slowing demand and increasing repayment pressure. The effect on margins depends on how quickly lending yields reprice relative to deposits and wholesale funding. SBI and the wider banking sector are therefore directly exposed, while rate sensitive housing, automobile and property businesses may face softer financing demand. SBI’s expectation of resilient credit growth would gain support from sustained loan expansion, stable asset quality and margins after repricing. It would be weakened by slower borrowing, faster deposit cost increases, rising delinquencies or further weakness in bank shares.