SBI looks to avoid riskier loans for capital conservation

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26 Aug, 2025 12:21

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State Bank of India (SBI) has pegged its credit growth for the current financial year at 10-12 percent, to be mostly driven by retail loans. The bank has decided to go risk-averse on the corporate front to salvage capital.

“There will be growth but it will focus on quality as far as corporate credit is concerned. But we will not miss the opportunity to grow because we are capable of growing and managing the risk,” said Rajnish Kumar, Chairman, SBI.

The bank’s advances grew 11.96 percent in 2018-19. Of this, the retail segment that makes up for 58 percent of the outstanding loans grew at 18.52 percent, while the corporate book grew at 14.83 percent as on March 2019.

“Lot of attention is being paid to managing the balance sheet in such a manner that any asset which guzzles the capital, we are not going for those assets. There is more focus on risk-weighted assets,” Kumar said after announcing the fourth quarter results on May 10.

The bank’s capital adequacy ratio stood at 12.72 percent as on March 31, 2019, up from 12.60 percent at the end of the previous financial year. Its Tier I capital also improved to 10.65 percent from 10. 36 percent a year ago.

In order to improve the risk management system, the bank has created a credit review department and rewritten its sector-specific loan policies. The bank has also deployed new technological tools to check any diversion of funds.

On the asset quality front, Kumar said the bank will be “very watchful” of the corporate loan book going forward. Slippages from the retail portfolio that includes agriculture, small and medium enterprises and personal loans, are likely to ease in the coming quarters.

Of the Rs 7,000-crore additional bad loans, Rs 2,592 crore was from agricultural sector owing to the debt waivers, while Rs 2,200 crore came from the corporate book, Rs 2,092 crore from SMEs and Rs 537 crore from personal loans.

The bank’s gross non-performing assets (NPA) ratio fell to 7.53 percent in the January-March quarter, from 10.91 percent in the same period last year. Its net NPA ratio also improved to 3.01 percent from 5.73 percent from a year ago.

SBI posted a net profit of Rs 838 crore in the fourth quarter of 2018-19, as compared to a loss of Rs 7,718 crore in the same period the previous year.