SBI Chief Warns Of Risks From Digital Finance Growth

State Bank of India (SBI) Chairman C S Setty has warned that rapid growth in digital finance, platform lending and artificial intelligence (AI)-driven underwriting is creating new vulnerabilities in the financial system.

Speaking at the CII Annual Business Summit during a session on “The Future of Financing”, Setty said banks and financial institutions would need to strengthen governance frameworks, capital buffers, cybersecurity capabilities and risk management systems as the banking sector undergoes technological transformation.

Digital Finance Creates New Risks

He said India’s financial architecture would have to remain resilient while expanding digital financial services and formal credit access across sectors.

“As India’s financial system expands in scale and complexity, trust must remain its foundational principle. Innovation without trust cannot sustain itself,” Setty said to PTI.

Concerns Over Cybersecurity And Bias

According to Setty, the increasing use of digital finance and AI-based underwriting has created opportunities for faster credit delivery and wider financial inclusion, but it has also introduced fresh risks.

He cautioned that cyber threats, operational vulnerabilities, algorithmic bias and growing interconnectedness within the financial system could create significant challenges for banks if governance systems do not evolve alongside innovation.

Setty stressed that maintaining public confidence would remain essential as more consumers and businesses enter the formal financial system.

“Speed must never come at the cost of safety, and innovation must never undermine inclusion,” he said at the event, adding that customers must continue to feel secure about the integrity of the financial system.

Large Capital Requirement By 2047

Setty also said India would require large-scale capital mobilisation to achieve the Viksit Bharat goal by 2047. He estimated that investments worth around Rs 3,000 lakh crore to Rs 3,500 lakh crore would be needed over the coming decades.

According to him, nearly Rs 600 lakh crore to Rs 650 lakh crore would need to be mobilised by 2035 alone.

He said banks alone would not be able to finance the country’s long-term development needs and called for deeper bond markets and greater participation from mutual funds, pension funds and insurance companies.

Shift In Household Savings

Setty noted that nearly 90 per cent of bank balance sheets are currently built through deposits, but household savings patterns are changing, with more investments moving towards mutual funds, insurance and retirement products.

He also said public capital expenditure had acted as a major driver for private investment. Government capital spending, he noted, had increased from around Rs 2 trillion in 2014-15 to a budgeted Rs 12.2 lakh crore in 2026-27.

Setty added that infrastructure-focused institutions and instruments such as infrastructure investment trusts and REITs were helping deepen the country’s infrastructure financing ecosystem.