Corporate Push: Behind SBI's Blistering Wholesale Loan Growth

State Bank of India is actively pursuing loan opportunities across large corporates, nearly a decade after bank abandoned large cheques in favour of retail lending. This comes at a time when other peers are taking a back seat on infrastructure loans, ahead of the central bank's tougher provisioning norms.

According to the people quoted above, for the better part of the last 18 months, SBI has been canvassing large borrowers, in a bid to offer them the best possible deal. Borrowers seeking credit are now beginning to line up for SBI. Currently, the lender is reviewing loan proposals, ensuring the asset meets risk metrics and then underwriting large cheques.

Once it has taken over the loan, SBI is selling down portions to other large lenders, the people quoted above said.

In recent months, SBI has underwritten two large loans, cumulatively accounting for nearly Rs 60,000 crore worth corporate debt, they said. These include Bharat Petroleum Corporation Ltd's Rs 32,000 crore loan demand to expand its Bina refinery and Cauvery Basin Refinery and Petrochemicals' demand for around Rs 25,000-30,000 crore worth debt.

These loans are indicative of the bank's ambition to lead the new corporate credit cycle in India, the first of the two people quoted above said. According to disclosures made by SBI during the second-quarter results' announcement, corporate loans worth Rs 6 lakh crore are in the pipeline as of now. Of this, Rs 3 lakh crore have been sanctioned and awaiting disbursals, while the rest are awaiting final approvals.

"Of course, not all of this will fructify, but we keep engaging, keep getting more leads, keep getting more conversation. This is all about conversation and being in the right place," Ashwini Kumar Tewari, managing director, SBI, told analysts on Nov 8.

Sectors such as renewable power, thermal power, roads, petrochemicals, steel and real estate are leading this demand, Tewari told analysts.

The bank is not looking to show any big bang growth numbers and maintains a conservative 14-16% credit growth target, with deposit growth at 10% for FY25. SBI will likely continue its current growth trajectory, where corporate loans grow faster than retail.

In the Jul-Sep quarter, SBI reported an 18.3% year-on-year growth on its corporate loan book which stands at Rs 11.57 lakh crore, while its retail loans rose 12.3%. Overall, domestic loans were up 15.55% in the second quarter.

Interestingly, the bank showed a positive year-to-date growth in its corporate loans during the first half of FY25, the first in many years, the second person quoted above said.

The bank is not deploying any sectoral bias currently, as its approvals are based only on risk adjusted returns for now, the second person said.

Currently, SBI's return on risk-weighted assets is at 2.07%, which is an industry leading ratio, SBI Chairman CS Setty had told analysts.

"By combining our market shares in both asset and liability products with RoRWAs, it is evident that the bank has a dominant presence in all the large risk-adjusted profitable lending and liability markets in India," Setty had said.

While the bank is betting on higher borrowings by corporates in the months ahead, companies have been a little tentative in the near term, the two people quoted above said. This is expected to change in the next fiscal, once geopolitical concerns get resolved and if domestic growth holds strong, the people said.