State Bank expects corporate loan growth to be in double digits

NEW DELHI: With the pick-up in economic activity, State Bank of India (SBI) is seeing a clear revival in corporate credit demand and expects the segment to hit double-digit growth over the remaining two quarters of the current financial year, the bank’s chairman CS Setty said.

As far as the pipeline for corporate credit is concerned, he said, “The bank has a strong pipeline. We have about Rs 7 lakh crore loan sanctions, a mix of unutilised working capital limits and term loans that are currently under disbursement.”

Besides, includes several project loans that are presently under discussion, he said. So, the corporate credit, which was lagging for quite some time, witnessed a turnaround with 7.1 per cent growth in Q2, he said, adding, “Our guidance on the corporate credit would be the lower double digit in the two quarters with the available pipeline”.

Improving economic activity is also pushing up working capital utilisation, which is becoming stronger with each passing quarter, the chairman of the country’s largest lender said. With regards to term loans, he said, the ones which are already approved and under disbursement are getting drawn, and the third category, where the projects are under discussion, will create that replacement pipeline.

The SBI chairman also said the bank may not need equity capital to drive credit growth and maintain a capital adequacy ratio of 15 per cent over 5-6 years.

Expressing confidence of achieving its 3 per cent net interest margin guidance, he said, it will be done even if the Reserve Bank decides to cut the repo rate by 0.25 per cent in the upcoming monetary policy review. The RBI decision next Friday will be a “close call”, he said, the house view at SBI is pointing towards a shallow cut of 0.25 per cent.