SBI Expects Rs 3.5 Trillion Corporate Loan Boost from Private Sector Investments

7 Aug 2023 , 03:23 PM

State Bank of India (SBI) anticipates disbursing Rs 3.5 trillion ($42.30 billion) in corporate loans during the remaining period of this financial year, as private companies increase investments in key sectors, according to the chairman of the country’s largest lender, Dinesh Kumar Khara.

The Indian economy, starved of private investment for years, has shown early signs of recovery with increased government capital spending and deleveraged corporate balance sheets, leading to capacity additions by companies.

Nearly 80% of the incremental loan demand is coming from the private sector, with a positive impact on small and medium enterprises as well, Khara mentioned.

About 70% of the Rs 3.5 trillion loans are expected to be in term loans, contributing to a 12%-13% growth in SBI’s corporate loan book this fiscal.

New projects are emerging in greenfield sectors such as renewable energy, batteries, battery storage, and electric vehicles (EVs), while core sectors like steel, cement, road infrastructure, and airports are witnessing capacity additions.

SBI’s total domestic advances stood at Rs 28 trillion as of June 30. The bank is cautious about potential stress in segments like home, auto, and personal loans due to high interest rates. Over 80% of SBI’s retail loans are to salary-account holders, providing better visibility on borrowers’ cash flow.

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