Digital finance risks: SBI Chairman C S Setty urges trust, governance, and cyber resilience

State Bank of India Chairman C S Setty warned that fast expansion in digital finance is exposing fresh weak spots. C S Setty said platform lending and data-based underwriting bring gains, but also risks. C S Setty added that financial resilience must keep pace with new tools. C S Setty spoke at the CII Annual Business Summit during a session on The Future of Financing.

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Setty said banks and financial institutions must upgrade defences as technology reshapes banking. Setty pointed to stronger governance, larger capital buffers, tighter cybersecurity and better risk controls. Setty said India’s financial design must stay strong while change accelerates. Setty also said trust must be built into each step of financial innovation.

Digital finance risks and trust in India’s financial system

"As Indias financial system expands in scale and complexity, trust must remain its foundational principle. Innovation without trust cannot sustain itself. The rapid growth of digital finance, platform lending and AI-driven underwriting creates new opportunities but also new vulnerabilities,\" he said at a session on The Future of Financing.

Setty said cyber threats and operational gaps could strain banks if controls lag behind innovation. Setty also flagged algorithmic bias and rising links across institutions as added pressure points. Setty cautioned that these factors may widen damage during disruptions. Setty said frameworks must adapt so new products do not weaken system stability.

\"Speed must never come at the cost of safety and innovation must never undermine inclusion. Ultimately, the Indian customer must continue to feel secure and confident in the integrity of our financial system. That confidence is our greatest institutional asset,\" Setty said.

Capital mobilisation for Viksit Bharat and India’s financing needs

Setty said India would need large-scale capital to meet the Viksit Bharat goal by 2047. Setty cited estimates of Rs 3,000 lakh crore to Rs 3,500 lakh crore over coming decades. Setty said about Rs 600 lakh crore to Rs 650 lakh crore must be raised by 2035. Setty linked this need to expanding scale and complexity.

Setty said banks alone could not fund India’s long-term development. Setty called for deeper bond markets and wider roles for mutual funds, pension funds and insurance firms. Setty said around 90 per cent of bank balance sheets are built through deposits. Setty added that savings flows are shifting towards funds, insurance and retirement products.

Public capital expenditure and infrastructure finance in India

Setty said public capital expenditure has supported private investment. Setty noted government capital spending rose from about Rs 2 trillion in 2014-15. Setty said it reached a budgeted Rs 12.2 lakh crore in 2026-“27. Setty said this trend has acted as a key push for investment activity across the economy.

Setty said newer institutions and instruments are widening infrastructure funding options. Setty cited the National Bank for Financing Infrastructure and Development and the National Investment and Infrastructure Fund. Setty also mentioned infrastructure investment trusts and REITs. Setty said these channels are helping deepen India’s infrastructure financing ecosystem as funding needs rise.

With inputs from PTI