SBI Chairman Sees Private Capex Revival, Rs 4 Lakh Crore Credit Demand in Pipeline

State Bank Of India Chairman C S Setty has said the bank has already got Rs 4 lakh crore strong credit pipeline from India Inc and expressed hope that capital expenditure by the private sector is expected to pick up in the second half of the fiscal.

"We see a good amount of interest in private capital expenditure. The infrastructure financing, of course, is mainly coming from the roads, renewable energy, and some of the refineries," he told PTI in an interview.

As far as public spending is concerned, Finance Minister Nirmala Sitharaman in the Budget proposed to raise the capital expenditure target by 11.1% to record Rs 11.11 lakh crore for 2024-25. This is 3.4% of the country's Gross Domestic Product.

Setty said some of the corporates had undertaken brownfield expansion for which the capital expenditure was funded by their own cash accruals and cash balances that they had.

However, he said, "We now see some of the corporates drawing the term loans for brownfield expansion too.We have a pipeline, both in terms of sanctioned but not disbursed and a pipeline of proposals which are under process. This amounts to almost Rs 4 lakh crore, indicating that the corporate pipeline is strong," he said.

Stressing that the private capital expenditure definitely will pick up during the year, he said, there is renewed government expenditure after the first quarter slowdown due to general elections.

"We see in the second quarter, as well as in the second half of the current financial year, both capital expenditure will be spurred by the government expenditure as well as private expenditure," he said.

On monetisation of SBI's stake in some of its subsidiaries, Setty said, there was no thinking in terms of divestment of stake of any of the subsidiaries presently.

"If these subsidiaries require (growth) capital, we will definitely examine," he said.

At this point in time, he said none of the large subsidiaries require capital from the parent to scale up their operations.

The bank in the 2023-24 fiscal year infused an additional capital of Rs 489.67 crore in SBI General Insurance Company Ltd.

The company has also allotted ESOP to employees and consequently, the bank's stake has decreased marginally from 69.95% to 69.11%.

Setty also said the Reserve Bank of India is unlikely to ease the benchmark policy rate during 2024 given the uncertainty over food inflation.

The US Federal Reserve's first cut in interest rate in more than four years of 50 basis points took place last week, triggering central banks in other economies to follow suit. The decision lowers the federal funds rate to a range of 4.75-5%.