State Bank of India (SBI) expects to achieve above industry average credit growth in FY24, with retail personal loans continuing to be the main driver of growth.

SBI has projected its domestic advances to grow 16.17 per cent year-on-year (y-o-y) in FY24. It recorded 16.91 per cent y-o-y growth in domestic advances as at December-end 2022.

Even as retail personal loans, which grew 18.10 per cent y-o-y as of December-end 2022, will continue to be the main driver of credit growth, SBI plans to sharpen focus on manufacturing exports and regain leadership in the SME segment, per its business strategy for FY24.

Further, the bank expects to capitalise on the likely upturn in the capital expenditure (capex) cycle, giving it enough headroom to increase corporate loan book.

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“Outcome-based engagement with corporates and their entire ecosystem should be accorded high priority. Further, sunrise sectors like EV (electric vehicle), lithium batteries, green hydrogen, warehousing, defence etc. are also expected to give good business opportunities which need to be tapped.

“These steps would also help in increasing our ESG (environmental, social, and governance) portfolio which is now gaining in importance for all stakeholders,” said Dinesh Kumar Khara, Chairman.

Financial inclusion

In the agriculture and financial inclusion segment, SBI plans to target affluent farmer segments and garner a larger share of investment credit besides the traditional product offerings of Kisan Credit Card, Self Help Group loans, Agri Gold Loans, Government sponsored schemes, among others.

“Engaging with agri techs and agri start-ups should be explored to boost our credit growth and lend continued support to the Agri Sector.

“We are also working on a revamped Agri Tech stack to deliver simplified end-to-end digital loan journey to improve onboarding and customer convenience,” Khara said.

Fee income

As capex in infrastructure projects scales up and infrastructure spending picks up as expected in FY24, SBI sees some spurt in bank guarantee fee.

“We should ensure adoption of “Originate to Distribute” model (down-selling) in infrastructure financing for fee based income,” the SBI chief said.

While the bank expects loan processing fees to grow in line with overall loan growth, it plans to rationalise fee waivers and ensure RAROC (Risk-adjusted return on capital) based pricing.

SBI plans to further increase distribution fee income by leveraging its large customer base and wide distribution channel.

“At present, our product/services per customer stands at 2.84. There is significant headroom for increasing cross-sell income from both third party as well as proprietary financial products.

“We can continue to work towards technology integration with third-party financial services for omni-channel service delivery,” Khara said.