‘Expect 8-9% credit growth in FY21 as economic activity gathers pace’

State Bank of India (SBI) expects a credit growth of 8-9% at the end of financial year 2021, against 7% projected in the previous quarter. In an interaction with media after earnings, chairman Dinesh Kumar Khara said the bank is expecting 8-9% credit growth as economic activity has gathered pace. He said the bank has received applications for restructuring Rs 6,495 crore of loans. Excerpts:

What is your outlook on the credit growth for the entire year?

We are expecting an 8-9% credit growth because economic activity has gathered pace. We have already seen the growth as far as our book is concerned. We have seen growth of about 6% till September 30. Hopefully, with the unlocking happening, we should be in a position to reach better than 8%.

You said retail growth is back on pre-Covid levels? In which segments do you see growth?

As far as the retail book is concerned, we are seeing good amount of traction in home loans. In fact, as far as home loans are concerned, sanctions are up about 29% year on year (YoY) in the September quarter and disbursements have gone up by 12% in the said quarter. In case of auto loans, we have seen a growth of 29% in terms of sanctions and 27% in terms of disbursements. In personal loan sanctions, there was a growth of 55% during the September quarter and sanctions have gone up by 61%.

Which sectors account for fresh slippages?

Fresh slippages are more in the agri sector, followed by small and medium enterprises (SME) sector. But, in SME, we have been able to pull back to a great extent. The corporate slippages have come down significantly. If we compare with first half of FY20, the corporate slippages were `8,593 crore, whereas in the first half of FY 21, it was only `1,232 crore.

What is the trigger for slippages in the agriculture sector?

During the Covid-19 period, when it comes to reaching out to farmers, the activity of the bank was not as much as it should have been. That is one of the reasons, perhaps, which is actually showing up in this number. We are now engaging with the farming community. For crop loan renewals, we can now go to villages and conduct camps, and even farmers can visit our branches.

How much percentage of your book is are under watchlist, compared to June quarter?

In the previous quarter, 13,300 crore of the book was kept under watchlist for a likely slippage. And now, we have slippages of around Rs 14,000 crore. Out of this, we have already pulled back `6,000 crore. So on a like-to-like basis, Rs 13,000 crore would come to around Rs 8,000 crore.

What is the status of applications for debt restructuring?

We have received the request for `6,495 crore. Out of this, Rs 2,400 crore is coming for retail book and rest `4,000 crore from corporate book. We have received applications from 42 corporates for restructuring, none of them account for a large account.

In your assessment, how many more restructuring requests may come up till December 31, 2020?

We are expecting additional restructuring request of Rs 13,000 crore. It may not be so, but we have kept a very liberal estimate. It may not be Rs 13,000 crore, it may be much lesser also. It would be largely from corporates and a bit of MSMEs.

Will restructuring affect credit bureau scores of retail customers? Will you report to credit bureau?

Yes. Restructuring will be reported.

Do you think that collection efficiencies at this level are sustainable?

I think it is sustainable for the simple reason that during the Covid-19 period they have accumulated this kind of liquidity, but once revival of the economy happens, I am sure there would be much more cash flows. This will enable them to take care of their repayment obligations. So, I think this kind of collection efficiency is also a reflection of the behaviour when it comes to the repayment, and how seriously repayment obligations are taken. Because many borrowers are very mindful of the impact of any kind of a impairment on their bureau score. Those who are not able to take care of repayment obligations will come for restructuring. There is a definite effort on the part of the bank, wherever we are seeing not enough credit in the deposit accounts, we are trying to reach to all such customers proactively and guide them for the restructuring options.

How are you placed on credit cost and what is the outlook for the same?

For the quarter, credit cost stood at 0.94%; it was 1.24% on an annualised basis. We are hoping to keep credit cost below 2%.