SBI head warns of banking gap in new industries

3 Sep 2024 , 01:25 PM

SBI chairman C S Setty recently spoke about the problems banks face when lending to growing areas like green energy and battery storage. Despite years of experience in infrastructure financing, banks continue to lack knowledge in these new areas, according to the chairman.

He stated that previous corporate lending excesses resulted in an increase in non-performing assets (NPAs), which pushed banks towards personal loans due to difficulty lending to small firms and retail.

“While we anticipate that much of the capital will originate from abroad and assist domestic capital development, universal banks, particularly large ones like SBI, are expected to play a role in infrastructure finance. Despite our years of experience in project financing, the skill set required to analyse developing areas is lacking. One possibility is to establish a centre of excellence in these areas in partnership with multilateral development banks and large multinational banks. “We’re working on it,” stated Setty.

He emphasised the necessity for banks to learn new abilities for evaluating new business sectors. This is especially essential given the financial sector’s desire to make a meaningful contribution to infrastructure funding.

Banks may be able to close the knowledge gap in new sectors by establishing a centre of excellence. This collaborative strategy could entail working with multilateral development institutions and global enterprises.

For feedback and suggestions, write to us at [e-mail]