State Bank of India Chairman Dinesh Kumar Khara has said there is a growing demand for credit from the corporate sector and loans worth Rs 5 lakh crore are in the pipeline.
Unlike the past few years, when the corporates had sufficient cash surplus on their balance sheet, they have started looking for credit to fund working capital requirements and capacity expansion, he told PTI in an interview.
”Now we have come to a stage where they (corporates) have started approaching banks for augmenting their capacity or for working capital purposes. Of course, this I can say with confidence because when we look at our unavailed term loan percentage, it has come down from 25 per cent to 18 per cent and when we see the working capital utilisation, even that has improved,” he said.
So, all these are confirming that private sector opportunities are going to be there and SBI will be in a position to create value for the sector, he said. At the same time, he said, ”When we look at our pipeline for the new proposals, that is also quite healthy, somewhere around Rs 5 trillion or so”.
With regard to Retail Agriculture and MSME (RAM) lending, Khara said, SBI can grow the book at 16 per cent during this year as well despite the high interest rate.SBI reported a 16 per cent growth rate in RAM to about Rs 21 lakh crore during FY24. Emphasising that the bank has a very elaborate process of assessing the risk and underwriting RAM, he said that the current book looks pretty good.
”We don’t have any challenges, he said, adding, ”We can comfortably grow 16 per cent as far as our RAM book is concerned. We don’t envisage that the interest rate impact will be seen in terms of the quality of the loan book. ”When we are making assessment for underwriting, we are quite cognizant of the likely interest rate scenario, and the ability of the borrowers to repay loan in time.
That is the reason why our RAM book has not witnessed much challenge and we can afford to continue at 16 per cent,” he said. Asserting that there is no stress on housing and vehicle loans, Khara said, the gross NPA in the whole retail portfolio is 0.7 per cent. ”It is nothing but a reflection of our underwriting standards and our ability to pick the right quality business. We are seeing adequate opportunities for us to underwrite mortgage and car loans. So I think we have not seen any challenge,” he added.
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