India’s largest lender State Bank of India (SBI) wants to immediately begin to recapture the growth in credit offtake after a devastating post-demonetisation loan book. It wants to use the maximum potential of its latest 0.90 bps cut in lending rate in growing the loan book, mainly targeting the homebuyers.
The public sector banking monolith, which is still the top in the BW Real 500 list of Indian financial companies with assets worth Rs 29,70,898 crore and Rs 2,72,871 crore turnover in 2016, had said recently that its loan book has not grown at all after the note ban announcement on 8 November.
Announcing the substantial rate cut after the demonetisation, chairperson Arundhati Bhattacharya said, “Since demonetisation, the bank saw a contraction in lending. We hope that offering the lowest rate in the industry would help it resume lending activities.”
Certainly, there are signs of recovery. According to officials at the bank with whom BW Businessworld spoke in the last few days, the response to the rate cut that was announced on 1 January, has been quite impressive and there is a significant jump in loan inquiries, especially for home loans.
“We are witnessing lots of interest in the market now, especially in the housing segment. The traffic on our portal has grown by almost three times since the announcement of the lowered interest; and it is an important sign of market revival in the home loan slot.”
Although the year 2015-16 too was a difficult year for the global economy, SBI scored better in most of its growth criteria. The bank, which is now in the process of merging its five large regional subsidiaries in order to achieve a global scale, aggregated deposits worth Rs 17,30,722 crore in fiscal year 2016, up 9.76 per cent against the previous year. The higher growth in SBI’s deposits, compared to the growth of all scheduled commercial banks, pushed up its market share by 57 bps to 17.57 per cent in March 2016. According to the bank’s annual report for the year, this growth was mainly driven by growth in personal segment deposits, more specifically by growth in low-cost current and savings account (CASA) deposits. The bank improved its CASA ratio to 43.84 per cent during this period as against 42.88 per cent a year ago. While its deposits in savings accounts grew by 13.17 per cent to Rs 5,81,564 crore, current account clocked a growth of 9.62 per cent to reach Rs 1,35,768 crore in financial year 2016.
During the year, SBI’s advances crossed the Rs 15,00,000-crore mark, and grew at 13.04 per cent to Rs 15,09,500 crore by March. The higher growth in its advances compared to the banking industry, pushed up its market share by 34 bps to 16.30 per cent in 2015- 16. By clocking a robust growth of 20.06 per cent, its retail advances remained the most impressive, contributing significantly to the rise in overall loan disbursements; while delinquencies in the segment remained significantly benign, supporting its strategy of growing more aggressively in the market. Within retail, auto loans registered a healthy growth of 19.91 per cent to Rs 38,549 crore and home loans grew 19.67 per cent to Rs 1,90,552 crore.
The home loan portfolio of SBI, which retained its position as the country’s largest home loan provider with a market share of 25.52 per cent at present, currently constitutes nearly 60 per cent of retail loans.
BW Reporters
Unnikrishnan is currently Senior Associate Editor with BW Businessworld at its Mumbai Bureau. During his two decades long journalistic career, he has received several media awards and recognitions. His articles on healthcare, life sciences and intellectual property rights (IPR) have been republished by several international blogs and journals.
