Mumbai, Sep 10 (PTI) State Bank of India Chairman C S Setty on Thursday dismissed concerns that FCNR(B) flows could lead to "abnormal lending", pointing out that the inflows would be deployed over a period of up to four months.

Setty, who heads India's largest lender, said bankers would be responsible for deploying the funds of over USD 127 billion garnered from the diaspora as part of the special concessional swap window from the RBI (Reserve Bank Of India).

"I don't think (it will lead to abnormal lending), everybody will be more responsible," Setty told reporters on the sidelines of the annual GFF (Global Fintech Fest) here, replying to a question on whether the inflows will lead to abnormal lending.

Speaking at the same event on Wednesday, the third largest private sector lender Axis Bank's Managing Director and Chief Executive Amitabh Chaudhry had flagged concerns that the FCNR(B) money could lead to some "abnormal lending".

Setty said the money will get deployed in the next three to four months.

He said the RBI's six-member monetary policy committee is unlikely to go for a rate hike in the next policy review in October.

A lot of market watchers have been speaking about the possibility of a rate hike, especially with inflation risks because of the geopolitical tensions and also the narrowing of the rate differential between India and the US.

BANKING ON AI ----------------- Speaking at the event earlier, Setty said Indian banks have been using artificial intelligence and machine learning tools for many years, and cited SBI's own pioneering efforts in the area by using such technology inputs for customer services and some lending products as well.

With the age of agentic AI before us, Setty said, "We may need to devise a 'know your agent' (KYA) on the lines of know your customer (KYC) guidelines which the banks have adopted. He said it will be necessary to devise such guidelines especially in a world where customers' AI agents become commonplace." The initial costs of deployment will be high on agentic AI, but the incremental costs will be low as it is used widely, Setty said.

Setty further said agents can be deployed in areas where the scale and speed in transactions that they bring about change the life of a customer.

In a situation where there will be increased automation, banking sector employees will have to concentrate on honing relationships and problem solving.

Stating that technology inputs are largely used by relationship managers and wealth management firms serving the top billing clients, Setty said the usage of AI will help democraticise financial intelligence.

The next frontier for India is to develop foundational large models which understand and inculcate the diversity of the country which will ensure its success, Setty said.

Agentic AI will require a "coalition" to work together, which will involve the government and regulators ensuring that innovation happens within the confines of a set space, he said. PTI AA VHI DR DR