SBI boss Dinesh Khara on credit growth revival, loan recoveries and more

State Bank of India chairman Dinesh Khara is hopeful of a pickup in credit growth as retail loans maintain momentum and the corporate book recovers after the nation’s largest lender posted record quarterly profits.

Khara also hopes the stress levels in the SME book will ease in coming months and the state-run bank may even recover some money from large accounts that it had previously written off.

The comments come after SBI reported a 55% jump in net profit to a record Rs 6,504 crorefor the April-June period. Business growth was led by retail loans, which expanded 16.5%, even as corporate loans fell 2.33%.

Credit growth, corporate book

Khara said SBI’s credit growth as well as investment growth are around 6.7%. But it could clock a credit growth of 9% if the economy manages to expand by 8%, he said, adding that SBI typically grows one percentage point above the pace of GDP growth.

Khara admitted the corporate book remained muted but said it was because of slow economic growth and as many companies had been reducing their debt. Corporate loans will recover as demand in the economy revives, he said.

SBI had more than Rs 130,000 crore of proposals in the pipeline and unutilised limits of about Rs 300,000 crorefor corporate credit, he said. “Hopefully, going forward, if the corporates decide to borrow, we will have enough liquidity in place and we are very well capitalised to support any credit growth which they would like to avail.”

Retail, SME loans and concerns

Khara said SBI doesn’t plan to slow down as far as its retail book was concerned.It will continue to grow well in terms of home loan, personal loan, credit cards and gold loans, he said.

Responding to a query that many banks were worried about rising retail delinquencies, Kharaadmitted there were some challenges in collections because of mobility restrictions and lockdowns due to the Covid-19 pandemic.

However, he said the situation was improving as the restrictions eased. In its home loan book, for instance, gross bad loans shrank to 1.12% from 1.34% between June 16 and July 30, he said.

SBI expects the SME book to improve, too. “Almost 50% of the book relates to SME borrowers and as SMEs had seen huge disruption in the cash flows, that led to the situation we had warned about. But with the recovery of the cash flows for SMEs, we will be in a position to see the pullback there,” he said.

Slippages and stress


Khara said loan slippages could reduce thanks in part to increasing Covid-19 vaccination levels in the country. He said that 74% of the bank’s staff had received at least one dose of the vaccine and that this gave him confidence that the bank would be able to tackle a third wave if it happened.

The bank has also been trying to recover money from large stressed accounts. SBI is targeting recovering of more than Rs 10,000 crore this fiscal year and has seen good traction with about Rs 1,692 crore coming from Kingfisher Airlines itself.“We are hoping other accounts will help us in reaching the numbers we have in mind,” he said.

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