Last year, the bank fell short of its target for 16 per cent growth in its loan portfolio as big companies did not take up debt which had been sanctioned, SBI chairman Janki Ballabh told Reuters in an interview on Wednesday.
“We intend to provide more incentives to the retail customer. We have lowered our lending rates recently and will provide more value-added services to attract him,” he said.
“Apart from the retail segment, we will concentrate this year on the mid-sized corporates.” Mr Ballabh said that margins in the retail segment were better than in corporate lending, as were the quality of assets due to fewer chances of defaults by retail consumers.
He said the bank hoped to increase consumer loans to Rs 70 billion this year from Rs 45 billion, and boost mortgage lending to Rs 45 billion from last year’s Rs 33 billion.
SBI, which accounts for 20 per cent of India’s banking business and has Rs 1.3 trillion in assets, lowered its prime lending rate, a benchmark for pricing other loans, by 50 basis points to 11 per cent from April 1 and also lowered rates on mortgage loans.
The sector’s main corporate lending business has seen a decline as industrial growth in the 11 months to February slowed to just 2.6 per cent from 5.4 per cent a year earlier.
This has pushed banks to look for alternative sources of income — from retail lending and investments in government bonds, whose yields have dropped 300 to 400 basis points in the past year to March.
Banks’ loans grew by 14.2 per cent last year, slowing from the previous year’s 15.6 per cent and 21.3 per cent the year before.
Analysts said the State Bank of India will face stiff competition from ICICI Bank, the country’s largest private sector bank, which is set to merge with its parent, financial services major ICICI Ltd. It boasts of superior technology and has a headstart in the retail segment, they said.
But Mr Ballabh said SBI’s massive network of more than 9,000 branches, compared with ICICI Bank’s 350, would help it meet this challenge.
It also plans to expand its automated teller machine (ATM) network, which is key to attracting more retail business as ATMs are increasingly becoming the preferred mode of transacting business in urban areas. “We currently have 1,050 ATMs and intend to provide another 1,000 in the next financial year,” Mr Ballabh said.