Mumbai, Sept. 10 -- A day after Axis Bank chief executive Amitabh Chaudhry warned that a surge in liquidity in the banking system, driven by record foreign-currency flows, could lead to abnormal lending, State Bank of India chairman C.S. Setty offered a more sanguine view, saying he does not expect the liquidity surplus to distort credit growth.

Speaking to reporters at the sidelines of the Global Fintech Fest 2026 on Thursday, Setty said the excess liquidity would likely be absorbed over the next three to four months.

Chaudhry had said on Wednesday that foreign currency non-resident bank or FCNR(B) deposits could lead to some abnormal lending because banks would need to deploy the funds. He hoped banks would not deploy all of the liqui...