Uptick in economy reviving corporate credit demand

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 Rs7 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 told PTI in an interview. 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 that 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.

“Even before this QIP was raised, our ability to fund credit growth has never been a problem. We wanted to strengthen the capital ratios so we have done that. Our long-term strategy is to maintain CRAR at 15 per cent and Common Equity Tier 1 at 12 per cent,” he said.