SBI to shrink corporate loan book to curb NPAs

Companies may find it difficult to get corporate credit from State Bank of India (SBI) with the bank focusing on public sector undertakings like oil companies and investment grade firms to control its non-performing assets (NPAs) which have hit Rs 2.23 lakh crore, constituting 10.91% of its total advances. Instead, the bank will focus on retail loans which it expects it to grow to 60% of its total advances.

The retail portfolio accounts for just 1% of the bank's total NPA while it is 10.91% for the total advances.

Rajnish Kumar, chairman, SBI, in a media conference said, "Retail growth will be pushed further while we become cautious on corporate loans. Only investment grade companies and those with a potential for growth will be handpicked for gorwth."

The large corporate group will come under investment and above grade borrowers, irrespective of the loan exposure. Those companies below the investment grade irrespecive of their loan exposure will be placed in the corporate credit group (CCG). This will result in large corporate branches coming down to just four branches from the current eight, as some weak groups will move out of the large corporate group.

"So some groups which are in the large corporate group will move down to the corporate credit group so that their loans will be closely monitored. Some big groups have already move to the CCG from the large corporate book. The loans will be classified on the basis of their performance." said an official.

SBI is already the largest lender for home loans, auto loans and also education loans.

Rajan Kumar Mishra, chief general manager in charge of personal banking, said, "We have the largest portfolio for auto loans with a market share of 30%. For personal loans the bank has a market share of 35% and for education loans we have about 35% of the market share.

The incremental growth in advances during the fourth quarter ended March 2018 was Rs 1,21,585 crore which was led by retail loans. During the quarter the retail loans witnessed a sharp uptick with incremental home loans growing by Rs 12,019 crore to Rs 313,106 crore during the quarter, personal loans grew by Rs 12,237 crore to Rs 167,126 crore, and auto loans grew by Rs 1,312 crore to Rs 66,362 crore. The total outstanding education loans of the bank was at Rs 20,720 crore.

Though corporate loan growth was led by advances to public sector oil companies the advances to other sectors was muted. The incremental loan growth to petrochemical companies was Rs 17,546 crore, advances to power companies grew by just Rs 2685 crore as power companies. Loans to telecom companies have come down by Rs 4458 crore.

The total advances of the bank at the end of the fourth quarter was Rs 20,48,387 crore and domestic advances was Rs 17,463,89 crore. Retail segment of the bank will include all loans up to Rs 40 crore. Agriculture advances and loans to the small and medium enterprises will also be classified as retail advances.

CURBING NPAS

• Bank to focus on retail loans which it expects it to grow to 60% of its total advances
   
• SBI to place large corporate group under investment and above grade borrowers, irrespective of the loan exposure
   
• Companies below investment grade irrespecive of their loan exposure will be placed in the corporate credit group