The State Bank of India (SBI), the country’s biggest public lender, anticipates a significant expansion in corporate loans as private investments gather momentum in India.
Dinesh Kumar Khara, the Chairman of SBI, shared with the news agency Reuters that the bank is expecting to grant Rs 3.5 lakh crore in corporate loans during the remaining period of the financial year. SBI aims for a 15 percent increase in credit growth for this fiscal year. Despite low private investment in recent years, increased government spending and efforts to reduce corporate debts have paved the way for a robust environment for private investments, according to the head of SBI.
Khara mentioned that nearly 80 percent of the rising demand for loans is originating from the private sector. He also revealed that around 70 percent of the Rs 3.5 lakh crore would be in the form of term loans, contributing to a 12-13 percent rise in SBI’s corporate loan portfolio this fiscal year. Khara informed Reuters that new projects are emerging in sectors like renewable energy, battery technology, electric vehicles (EVs), and more.
“In core sectors, the focus is primarily on increasing capacity in areas such as steel, cement, road infrastructure, and airports,” he further explained. It’s worth noting that SBI’s total domestic advances stood at Rs 28 lakh crore as of June 30.
While credit demand in the nation has been on the rise, driven by home, auto, and personal loans, Khara noted that SBI is mindful of potential stress in these segments due to high interest rates.
He highlighted that over 80 percent of SBI’s retail loans are given to salary account holders, providing the bank with better insight into a borrower’s financial flow.
In response to a report suggesting that the Reserve Bank of India might increase risk weights on unsecured personal loans to curb demand, Khara expressed concerns that this could make credit more expensive for customers.
He concluded, “Offering high-cost consumption credit is not a favorable approach.”