SBI loan rate update:
State Bank of India’s chairman, Dinesh Kumar Khara, indicated that the bank might reprice infrastructure loans if the Reserve Bank of India (RBI) implements its draft norms on infrastructure project financing. Khara noted that while the incremental provisions required by the new norms would not be significant and could be absorbed, they may still lead to loan repricing.
On May 3, the RBI proposed that banks should set aside higher provisions for infrastructure projects that are still under construction, with strict monitoring for emerging stress. Khara mentioned that SBI has assessed the impact of these proposals and plans to share its feedback with the RBI.
SBI’s infrastructure project finance book is approximately Rs 1.20 lakh crore. Under the RBI’s proposal, during the construction phase, lenders would need to set aside 5% of the loan amount as provisions, which would be reduced to 2.5% once the project becomes operational and further to 1% once adequate cash flow is established to repay obligations. These provisions are to be phased in: 2% in FY25, 3.5% in FY26, and 5% by FY27. Currently, the requirement is only 0.4% for non-overdue, non-stressed project loans.
Additionally, banks must have clear timelines for the start of commercial operations and increase provisions if there are delays. Any project delayed by more than three years should be reclassified from standard to stressed.
Regarding SBI’s Q4 results, the bank reported a 24% increase in net profit to Rs 20,698 crore, surpassing analysts’ estimates and showing improved asset quality. The gross non-performing asset (GNPA) ratio improved to 2.24%, down from 2.78% the previous year, while the net NPA ratio improved to 0.57% from 0.67%.
