Rationale

 The ratings continue to factor in State Bank of India's (SBI) majority sovereign ownership and its status as a domestic systemically important bank (D-SIB), given its dominant position in the Indian banking system. As on March 31, 2022, SBI had a market share of ~24-25% in advances and deposits, which remains the highest in the banking system. The ratings continue to reflect the bank's strong resource profile driven by the high share of current and savings account (CASA) deposits, resulting in an extremely competitive cost of funds and a granular deposit base. Given its strong resource profile, SBI's liquidity profile remains superior. The reaffirmation also considers SBI's healthy capital profile and strong operating profitability, which could absorb any unforeseen asset quality pressures. The bank has supported its credit growth ambitions over the past few fiscals through its internal capital accretion. ICRA believes SBI's incremental capital requirements remain limited for the targeted growth, while maintaining a buffer of at least 100 basis points (bps) over the regulatory ratios. Moreover, if required, the bank's ability to raise capital from the markets remains strong. While the headline asset quality indicators have improved during the past fiscals, the ratings also take note of the monitorable vulnerable book, comprising overdue and standard restructured advances. However, the additional provisions held against the restructured book remain a source of comfort. Given the high provision cover for the legacy stressed assets, ICRA expects that SBI's internal capital generation will continue to improve along with its asset quality and solvency position. The rating for the Additional Tier – I (AT-I) bonds factors in the healthy level of distributable reserves (DRs), which can be used to service the coupon on these bonds in the unforeseeable event of a loss. The Stable outlook on the ratings factors in ICRA's expectations that SBI remains well-placed to absorb any unanticipated asset quality shocks through its operating profit, given the high provision coverage on legacy accounts. Further, ICRA continues to expect that SBI will benefit from its dominant position in the Indian banking industry, strong ability to raise capital, robust resource profile and sovereign ownership. ICRA has withdrawn the rating assigned to the Rs. 10,500-crore Basel III Tier II Bonds, Rs. 500.00-crore Basel II Lower Tier II Bonds as these bonds have been fully redeemed and no amount is outstanding against the rated instruments. ICRA has also withdrawn the rating assigned to the Rs. 2,500-crore Basel III Tier I Bonds on request of the bank as the instrument was unplaced.