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SBI plans to go big on co-lending partnerships, says Chairman Dinesh Khara

Co-lending refers to partnerships between two lenders, typically a bank and a non-bank, to offer loans to the economically weaker sections or borrowers under the so-called priority sector lending (PSL) programme. Banks are embracing co-lending to scale up business and tap credit growth.

May 13, 2022 / 05:09 PM IST
State Bank of India Chairman Dinesh Kumar Khara

State Bank of India Chairman Dinesh Kumar Khara

State Bank of India, the country’s largest lender, is planning to ramp up its co-lending business, said Chairman Dinesh Khara on May 13. The bank will enter into co-lending partnerships for loans to agriculture and small and medium enterprises and aims to bring down slippages in these sectors, Khara said.

“We are getting into the co-lending kind of an arrangement (for agriculture and SME), Dinesh Khara told reporters at a press conference post-January-March results. “We have seen that co-lending partners have got more experience in terms of the quality of the book. We will be riding on that.”

Co-lending refers to partnerships between two lenders, typically a bank and a non-bank, to offer loans to the economically weaker sections or borrowers under the so-called priority sector lending (PSL) programme. Banks are embracing co-lending to scale up business and tap credit growth.

With expected better monsoons this year, slippages in the agriculture sector should come down eventually, Khara said.

The bank’s restructuring book, which is 1.1 percent of the total book, is also behaving well, Khara said. SBI is “not expecting any surprises” from non-performing assets.

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In terms of the bank’s margins, the gradual rate hikes by the Reserve Bank of India will have a positive impact, the chairman said.

“We have got the advantage because loans are getting repriced, but deposits, they go up with a lag, Khara said. “I expect that it should have a positive impact on the margins of the bank going forward, he added.

SBI also aims to maintain the current credit growth even in the next financial year, Khara said. The bank had reported a credit growth of 11.6 percent on-year in the Jan-March quarter and has a visibility of corporate loans worth Rs 4.6 lakh crore, Khara said.

The bank also has no plans to make YONO, it mobile banking application, into a digital entity.

“We would rather like to build the muscle in the bank and create value for all our stakeholders, including customers and stakeholders,” Khara said.

SBI will be also mindful of market realities before monetising stake in its subsidiaries, Khara said, adding that it will take it to the market at the right time.

Khara also said the National Asset Reconstruction Company will start taking bad assets “soon.”

To supplement this, Managing Director Swaminathan J said that the process of identification of bad accounts and due diligence is almost done.

“It is in the final stage of getting all approvals ready in terms of making binding offers to banks. We are probably a couple of weeks away from that,” Swaminathan said.

SBI Q4 Result

SBI reported a 41 percent year-on-year rise in net profit at Rs 9,113.5 crore for the quarter ended March 2022, which was below Street's estimate of Rs 9,927.6 crore.

SBI's net profit for Q4FY22 was its highest ever but it still underwhelmed the Street as expectations were on the higher side. The bank's shares slipped a little over 1 percent in response to the quarterly results.

The net profit growth was on the back of a 15.3 percent growth in net interest income which stood at Rs 31,198 crore. This too was lower marginally versus analysts' expectations of Rs 31,570 crore.

Non-interest income disappointed, slipping 27 percent year-on-year. But on a sequential basis, non-interest income jumped 37 percent while NII growth was a mere 1.6 percent.



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Siddhi Nayak is correspondent at Moneycontrol.com
Tags: #SBI
first published: May 13, 2022 05:06 pm
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