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SBI plans higher retail loan exposure

The State Bank of India, India's largest commercial bank, is planning a major shift in strategy to beat the current economic slowdown which has reduced demand from its traditional clients, a financial daily reported on Monday.

As much as 40 per cent of the planned loans during the current financial year will be to the retail segment, marking a significant change in policy from targeting top-rated blue-chips, chairman Janki Ballabh told The Financial Express in an interview.

He also said the bank would be focusing on second-rung companies and planned to introduce a slew of new products aimed at this segment.

India's economic slowdown had affected the industrial sector and reduced the opportunities for growth in this area while there was increasing potential in the retail segment, he said.

"It is time to re-orient ourselves keeping the long term business perspective in mind, and we are ready with a five-year plan for that," the paper quoted Ballabh as saying. India's GDP is expected to have grown by 6 per cent in 2000-01, down from 6.4 per cent a year earlier.

Industrial output growth has slowed, with the index of industrial production showing a rise of 5.1 per cent in April-February, compared to 6.5 per cent a year earlier.

This has hit bank lending. Total bank credit grew slightly over 20 per cent in 2000-01 compared to a little over 23 per cent a year earlier.

The Financial Express said SBI aims to advance new loans of Rs 160 billion during the current year, compared to the previous year's new loans of an estimated Rs 130 billion.

Included in the bank's annual Rs 60 billion retail target is Rs 39 billion of housing finance and Rs 20 billion of consumer goods finance, the paper said.

This is a sharp hike from the bank's exposure to the retail segment of Rs 26 billion in the last three years, the majority being in housing finance, the paper said.

SBI is aiming to raise deposits aggregating Rs 340 billion during this year to March and also increase its exposure to portfolio investments in the current year, the paper said.

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