There could be some moderation in credit growth in FY24: SBI Chief Khara

State Bank of India Chairman Dinesh Kumar Khara said there may be some moderation in credit growth in FY24. However, he is hopeful that the bank will achieve overall credit growth of 12-14 percent.

“About $1.75 lakh crore corporate loan proposals are already in the pipeline. Even that amount is somewhere around INR 1.78 crore,” he said at a press conference announcing the bank’s fourth-quarter results when we look at the proposals that we’ve already approved and we’re also awaiting payments.

As of the end of March 2023, total advances increased by 16 per cent year-on-year to INR 32,69,242 crore, with domestic retail advances and domestic corporate advances growing by 17.64 per cent and 12.52 per cent respectively. Global deposits increased by 9 per cent year-on-year to INR 44,23,778 crore.

Excess SLR

Khara said the bank is currently sitting on securities in excess of the SLR by about INR 4 crore. Therefore, deposits will not be a limiting factor in increasing the loan book.

The bank remains well capitalized (with a capital adequacy ratio of 14.68 per cent). “We have enough room to take care of the normal business growth requirements,” Khara said.

Total NPA

The bank’s overall NPA position improved to 2.78 percent of total advances, compared to 3.14 percent in the previous quarter. Khara said this is the lowest level in more than 10 years.

NPA’s net position also improved to 0.67 percent of net advances versus 0.77 percent in the prior quarter.

Asset quality

The SBI Chair emphasized that the continued improvement in asset quality is also reflected in the cost of credit, which is 32 basis points for the year. That’s down 23 basis points year over year.

Khara noticed that there was a decrease in SMA (Special Signal Account) 1 and 2 over a period of time. SMA accounts are loans that show signs of initial stress.

“Compared to March 2022, when this book was at Rs 3,544 crore, (SMA book) reached its peak at around Rs 8,000 crore in September 2022, but again it has fallen to Rs 3,200 crore.

“We have an effective follow-up mechanism in place to ensure that all these stressed accounts are restored. So, the quality of the assets must be maintained.